CONTENTS

2 Chairman's Message

6 Corporate Information

8 A History of Repeat Orders

20 Management Discussion & Analysis

38 Corporate Social Responsibilty

42 Directors’ Report

46 Corporate Governance Report

66 Auditors’ Report

72 Abridged Financial Statements

75 Abridged Cash Flow Statement

76 Notes to Abridged Financial Statements

96 Auditors’ Report on Consolidated Accounts

98 Abridged Consolidated Financial Statements

101 Abridged Consolidated Cash Flow Statement

102 Notes to Abridged Consolidated Financial Statements

1Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014

CHAIRMAN’SMESSAGE

2

Dear Shareholder,

The last three years have been extremely diffi cult for the country and your Company. However, one can look at the future with optimism with the Narendra Modi-led Bharatiya Janata Party (BJP) winning a comfortable majority in the Lok Sabha with 282 seats and with 336 seats if one were to focus on the National Democratic Alliance.

Fiscal year 2013-14 (FY2014) has been diffi cult for India - the second consecutive year of signifi cant economic strain. Here are the quarterly real GDP growth rates for the year according to the Central Statistical Organisation: 4.7% (April-June 2013); 5.2% (July-September 2013); 4.6% (October-December 2013); and 4.6% (January-March 2014). Consequently, GDP growth for FY2014 has clocked 4.7%, this coming after 4.5% growth in FY2013.

In such an environment, the engineering and construction sector has been badly affected. For FY2014, the construction sector grew by a mere 1.6%. While this was marginally better than the 1.1% growth in FY2013, it is a long way from the 10.8% growth that the construction sector saw in FY2012. That is not all. Manufacturing had grown by a mere 1.1% in FY2013 and has de-grown by 0.7% in FY2014.

The most worrying aspect of this sharply reduced growth is the lack of suffi cient investments. It is a fair estimate that 7.5% GDP growth requires India’s gross fi xed capital formation (GFCF) to be around 38% of GDP. In comparison, the GFCF was 32.3% of GDP in FY2014 - which was even lower than 33.9% in FY2013.

Infrastructure sector operates in a diffi cult framework in India. While I remain confi dent that the new BJP-led government will change things for the better, the fact remains that the sector has been riddled by multiple problems viz. signifi cant delays in decision-making, lack of environmental clearance for a variety of infrastructure projects etc.

In our business in India, there is also the issue of contractors’ claims not being settled and paid by the Government and public sector clients. This problem is faced by many companies in the engineering and construction sector. Engineering and construction contracts often involve changes of scope, variations and delays that are not on account of the contractors. In the developed world and in key emerging market economies, these claims are expeditiously settled within six to nine months. But in India, almost every meaningful claim results in a dispute with the Government or the public sector which fi rst goes through a process of arbitration followed by a case in court. It is not an exaggeration that thousands of crores of such disputed claims languish in courts.

3Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014

4

Thus, contractors are forced to go in for additional borrowing to meet the cash fl ow requirements. With the contracts not being settled, the borrowings increase. Soon it reaches a state where the debt becomes large and with high interest costs, engineering and construction companies face a debt and interest overhang. Many construction companies face this challenge in India including your Company. In other countries like Libya, your Company has faced a similar problem, owing to the political turmoil which I remain hopeful will settle in the current fi nancial year.

In such a diffi cult scenario, it is not surprising that your Company has not fared well in FY2014. Despite a comfortable order backlog of over Rs. 20,000 crore, Punj Lloyd has made losses on a consolidated basis, owing to such diffi cult scenario. The fi nancial highlights are:

Order backlog of Rs.20,222 crore. Net income from operations has reduced by 3.6% to Rs.10,855 crore. EBIDTA has dropped by 46% to Rs.638 crore, and stands at 5.9% of total income. Because of higher borrowing for reasons explained earlier, the fi nance cost has risen by 12.9% to

Rs.882 crore. There is a loss before tax of Rs.636 crore. Net loss after tax of Rs.644 crore. After taking into account the share of associates and minority

interests, the loss is Rs.548 crore.

Your Company is focusing hard on optimising projects and cutting down all additional costs. We are seeking to expedite collections. We are making organisational changes to create a lean, result-oriented enterprise. And we are looking at monetising some of our infrastructure assets. With these initiatives in place, I am confi dent that we shall overcome.

Now for some optimism. I am confi dent that the BJP-led NDA government under Mr. Narendra Modi with a comfortable majority in Lok Sabha will create an environment of stable governance and foster faster economic growth. I am quite certain that the vexatious constraints on infrastructure shall be removed sooner than we think. I am also confi dent that key developmental projects across the country will be kick-started. Mr. Modi is known to be an excellent manager and team leader. He has asked all ministries for their 100-day plan. I am sure that these will be moulded to generate higher growth.

Having said so, it will still take a few quarters before the animal spirits really come to bear. There is, after all, the cost of two years of negative action that must fi rst be overcome. But it will happen. And with it, India will grow more rapidly. As will your Company, which shall again be back in the world of energy and prosperity.

Here’s to much needed growth!

With my best wishes,

Atul PunjChairman

5Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014

CORPORATE INFORMATION

CHAIRMAN (EMERITUS)

SNP Punj

BOARD OF DIRECTORS

Atul Punj Executive ChairmanJ P Chalasani Managing Director & Group CEOLuv Chhabra Director - Corporate AffairsP N Krishnan Director - Finance & CFODr. Naresh Kumar Trehan Independent DirectorPhiroz Vandrevala Independent DirectorMs. Ekaterina Sharashidze Independent DirectorM. Madhavan Nambiar Independent Director

AUDIT COMMITTEE

Dr. Naresh Kumar Trehan Independent Director

(Chairman of the Committee) Phiroz Vandrevala Independent DirectorMs. Ekaterina Sharashidze Independent Director

STAKEHOLDERS RELATIONSHIP COMMITTEE CUM SHAREHOLDERS’ / INVESTORS’ GRIEVANCE COMMITTEE

Dr. Naresh Kumar Trehan Independent DirectorAtul Punj Executive DirectorLuv Chhabra Executive Director

NOMINATION & REMUNERATION COMMITTEE

Dr. Naresh Kumar Trehan Independent DirectorPhiroz Vandrevala Independent Director Ms Ekaterina Sharashidze Independent Director

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

Atul Punj Executive Director

(Chairman of the Committee) Luv Chhabra Executive DirectorM. Madhavan Nambiar Independent Director

GROUP PRESIDENT - LEGAL & COMPANY SECRETARY

Dinesh Thairani

6

BANKERS

Andhra Bank

AXIS Bank

Bank Muscat, Oman

Bank of Baroda

Bank of India

Barwa Bank

Canara Bank

Central Bank of India

DBS Bank Limited

Dhanlaxmi Bank

Doha Bank, Qatar

Export - Import Bank of India

Bank Emirates

First Gulf Bank, Abu Dhabi

HDFC Bank Ltd

ICICI Bank Limited

IDBI Bank Limited

IFCI Limited

Indian Bank

Indian Overseas Bank

IndusInd Bank

International Finance Corporation,

Washington DC

Life Insurance Corporation of India

Mashreq Bank PSC, Dubai

Oriental Bank of Commerce

RBL Bank

Standard Chartered Bank

State Bank of Bikaner and Jaipur

State Bank of Hyderabad

State Bank of India

State Bank of Patiala

The Jammu & Kashmir Bank Limited

The Karur Vysya Bank Ltd

UCO Bank

Union National Bank, Abu Dhabi

United Bank of India

AUDITORS

Walker Chandiok & Co LLP Chartered Accountants

REGISTRAR

Karvy Computershare Pvt. Ltd.

Plot No. 17-24, Vithal Rao Nagar, Madhapur, Hyderabad 500081

T + 91 40-4465-5000 F + 91 40-2342-0814

7Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014

MIDDLE EAST, CASPIAN and AFRICA

QATAR PETROLEUM

SAUDI ARAMCO

ABU DHABI GAS (GASCO)

ABU DHABI CO FOR ONSHORE OIL OPERATIONS (ADCO)

KARACHAGANAK PETROLEUM OPERATING BV

TENGIZCHEVROIL

SIRTE OIL COMPANY

HOUSING & INFRASTRUCTURE BOARD (HIB), LIBYA

MIDDLE EAST, CASPIAN and AFRICA

8

TOTAL INDONESIE

PT PERUSAHAAN GAS NEGARA (PGN)

CONOCOPHILLIPS

PETRONAS

SHELL

PB TANKERS

EXXONMOBIL ASIA PACIFIC

HORIZON TERMINALS

LAND TRANSPORT AUTHORITY OF SINGAPORE

PUBLIC UTILITIES BOARDSINGAPORE

ASIA PACIFIC

INTERNATIONALREPEAT CLIENTS

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TOTAL INDONESIE

TOTAL is the fi fth largest publicly traded

integrated international Oil and Gas

company operating in over 130 countries.

Punj Lloyd has executed several fi eld

development projects in Tunu and laid gas

pipelines in the Tambora fi elds in Mahakam

delta of Indonesia for TOTAL.

PT PERUSAHAAN GAS NEGARA (PGN)

PGN is a world-class energy company in

gas utilisation. Punj Lloyd has delivered

Phase I and II of the South Sumatra to West

Java Gas Pipeline for PGN. Another

signifi cant project executed was the

Panaran Pemping Gas pipeline in Indonesia

also known as the Hopping Island Project.

CONOCOPHILLIPS

It is the largest integrated energy

company in the U.S. and the fi fth largest

refi ner in the world. Punj Lloyd executed the

Sumpal Expansion Project for

ConocoPhillips in Indonesia. In Singapore it

executed the receiving facility and its

modifi cation on EPC basis, in a live refi nery

area in brownfi eld conditions.

PETRONAS

Petronas is the national Oil and Gas

company of Malaysia. Punj Lloyd is

currently laying the 521 km, 36” dia Sabah

Sarawak onshore gas pipeline for Petronas.

It has also constructed the 16” dia 128 km

multi-product pipeline from Melaka Refi nery

to Kuala Lumpur International Airport and a

new distribution terminal at Klang valley for

Petronas and Shell Malaysia.

SHELL

Shell is a global group of energy and

petrochemicals companies with a

presence in more than 70 countries. Punj

Lloyd has executed the new fuel oil terminal

at the Pulau Laut, Kalimantan, Indonesia for

Shell. It was also involved in the Hazira LNG

re-gasifi cation terminal in India and is

presently constructing a Lube Oil Blending

Plant (LOBP) and Grease Manufacturing

Plant (GMP) at the Tuas Lube Park in

Singapore.

PB TANKERS

Punj Lloyd has built the topside facilities

and the petroleum storage expansion

phase II at Pulau Busing for PB tankers. PB

Tankers is a company of the Barbaro

Group, operating in the MR Tankers market.

EXXONMOBIL ASIA PACIFIC PTE LTD

ExxonMobil is the world’s largest refi ner

and marketer of petroleum products.

Punj Lloyd has delivered many projects for

ExxonMobil including the SAR revamp and

the main mechanical PAC and PESEK at

Singapore.

HORIZON TERMINAL PTE LTD

Punj Lloyd has built as many as 57

storage tanks as part of the Bulk Liquid

Product Terminal for Horizon Terminals Pte

Ltd. For Horizon in Dubai, Punj Lloyd

delivered the Falcon Jetfuel Pipeline & Bulk

Terminal Facilities.

LAND TRANSPORT AUTHORITY OF SINGAPORE

The LTA is in charge of Singapore’s

infrastructural development.

Sembawang Engineers and Constructors

Pte Ltd, a Punj Lloyd Group company, has

built stations for the Downtown Line 1 & 2

and the Circle Line projects in Singapore for

LTA. It has also built the Changi Airport MRT

station, the Boon Keng and Sennett MRT

stations and the Ponggol and Sengkang

LRT systems in the past for LTA.

PUBLIC UTILITIES BOARD (PUB) SINGAPORE

Sembawang has executed the Changi

Water Reclamation project for the PUB.

In recent years, Sembawang won the Lower

Seletar Waterworks from PUB. REPE

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SAUDI ARAMCO

Saudi Aramco is a Saudi Arabian

national oil and natural gas company.

Punj Lloyd has laid offsite pipelines for

Yanbu Export Refi nery project for Saudi

Aramco. It has also recently completed

Package 9 of the Jubail Export Refi nery

Contract in Saudi Arabia, one of the largest

and most complex refi neries in the world.

ABU DHABI GAS INDUSTRIES LTD (GASCO)

GASCO is one of the largest gas

processing companies in the world. Punj

Lloyd has constructed pipelines and

storage tanks for two major projects of

GASCO - Asab Gas Development Phase II

and Onshore Gas Development Phase III. It

was also involved in the Integrated Gas

Development Phase V and also undertook

an EPC project of Nitrogen Gas Injection

(Mixed Case) for Habshan Fields.

ABU DHABI CO FOR ONSHORE OIL OPERATIONS (ADCO)

Punj Lloyd has constructed fl owlines

and well heads for ADCO oilfi elds in

Bab/Bu Hasa and pipeline in Huwailah. It is

executing a major EPC project with158

wellheads and 750 kms of fl owlines for

Asab Shah and Sahil fi elds. An EPC project

of Spiking Gas Compressor station is also

under construction.

KARACHAGANAK PETROLEUMOPERATING BV

Punj Lloyd has delivered the

Karachaganak Uralsk Gas Pipeline and

Stabilising & Sweetening Train, Aksai for

Karachaganak Petroleum Operating BV.

TENGIZCHEVROIL

Punj Lloyd has delivered two projects for

Tengizchevroil - the large and small bore

pipelines for TCO Asset Development and

the Second Generation Project Offsites and

Utilities at Tengiz, Kazakhstan.

SIRTE OIL COMPANY, LIBYA

Punj Lloyd has executed the El Khoms-

Tripoli Gas Pipeline Project at Sidra and

Wachkah and Tripoli-Melita Gas Pipeline

project at Melita for the state owned Sirte

Oil Company. Sirte Oil Company (SOC) is

one of the Libyan national companies

operating under the National Oil Corporation

(NOC) of Libya for production,

manufacturing of oil and gas.

HOUSING & INFRASTRUCTURE BOARD (HIB), TRIPOLI, LIBYA

Punj Lloyd has bid and won six projects

by the Housing & Infrastructure Board

(HIB) of Tripoli for the infrastructure network

of the country’s major townships - Arada,

Souk Al Juma, Zawara, Ragdaleen, Al

Jamail and Zliten.

QATAR PETROLEUM

Qatar Petroleum is a state owned

petroleum company operating in Qatar.

Punj Lloyd has delivered three large

pipelines for Qatar Petroleum - Strategic

Gas Transmission, Multi Product and Doha

Urban Relocation pipeline.

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NATIONALREPEAT CLIENTS

RELIANCE

ONGC

CAIRN INDIA

CESC

HPCL

GUJARAT GAS

CFCL

HYUNDAI

BHARTI

PETROFAC

BPCL

DMRC

NPCIL

OIL INDIA

HAL

CPCL

MRPL

NHAI

BG

IOCL

GAIL

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INDIAN OIL CORPORATION (IOCL)

Indian Oil Corporation is India’s fl agship

national oil company. Punj Lloyd has

executed complex hydrogen generation and

hydrocracker units, delayed coker, motor

spirit up-gradation and sulphur units in

prominent refi neries of India, other

than a multitude of pipeline and crude oil

tank contracts. Some of IOC’s projects

executed by Punj Lloyd are – Refi nery Units

at Panipat, Vadodara, Mathura, Barauni,

Haldia, Paradip, crude oil storage tanks,

LPG Import Export terminal at Ennore etc.

GAIL (INDIA) LTD

GAIL is India’s largest gas transmission

and marketing company. Some of the

projects executed by Punj Lloyd for GAIL

are - Thal Usar Thal pipeline, Maharashtra,

Jamnagar Loni Pipeline, Gujarat, Dahej

Vijaipur Gas Pipeline, Gujarat, Dabhol

Panvel Pipeline Phase I & II Maharashtra,

Dabhol-Bangalore Pipeline, Maharashtra

and Karnataka, amongst many others.

OIL & NATURAL GAS CORPORATION (ONGC)

Punj Lloyd has undertaken construction

activities for brownfi eld and greenfi eld

onshore, near shore and offshore projects

of ONGC, one of Asia’s largest Oil and Gas

exploration and production companies,

producing around 72% of India’s crude oil

and 48% of its natural gas. Punj Lloyd has

executed several projects for ONGC like

the Uran Trombay Jawahardeep oil and gas

pipeline, Heera Redevelopment project,

amongst many others.

BHARAT PETROLEUM CORPORATION LTD (BPCL)

Bharat Petroleum Corporation Ltd

(BPCL) is one of the largest public

sector oil marketing companies of India

ranking 229 in the Fortune Global 500

rankings of the world’s biggest corporations

for the year 2013. Punj Lloyd has executed

a volume of work for BPCL like the Aviation

Fuelling Complex at IGI Airport, New Delhi,

Oil Storage Depot at Bhilai and Rairu,

tankage depot at Bhilai and Brijwasan,

multiproduct Mumbai Manmad pipeline,

sulphur block and storage tanks for Kochi

Refi nery, among others.

NATIONAL HIGHWAYS AUTHORITY OF INDIA (NHAI)

The National Highways have a total

length of 71,772 km and carry about

40% of the total road traffi c in India. Punj

Lloyd has executed some of the most

prestigious projects for the NHAI -

Belgaum-Maharashtra Border Section

Updgradation, NH 4, Dharmawaram-Tuni

Section Upgradation, NH 5, Hyderabad

-Vijayawada Road Project, NH 9, Khagaria-

Purnea Road Project, NH 31 etc.

MANGALORE REFINERY & PETROCHEMICALS LTD (MRPL)

Punj Lloyd has executed the Phase III of

the Mangalore Refi nery and

Petrochemicals project to expand the

processing capabilities to 15 MMTPA from

12 MMTPA. It has also undertaken

mechanical work of Petro Fluidised Catalyst

Cracking Unit (PFCC) and Offsite piping

work as part of this expansion. Punj Lloyd

also completed the Coke Drum Structure

Package (CDSP) on EPCC basis.

CHENNAI PETROLEUMCORPORATION LTD (CPCL)

Punj Lloyd is currently executing a

repeat order from CPCL to build the

Sulphur Block of Resid Upgradation Project

at its Manali refi nery near Chennai. Punj

Lloyd had executed a similar project for

CPCL in 2003.

HINDUSTAN AERONAUTICS LTD (HAL)

Punj Lloyd has won orders for

components like Upper and Lower Tank

Panels for Sukhoi 30 MKI, Combustion

Chamber Casing, Spars for Dornier aircraft

and Housing for MGB- OTS from HAL,

Nashik, Kanpur, Koraput and Bangalore.

OIL INDIA

Punj Lloyd executed Gas Field

Development in Western Rajasthan for

Oil India. It recently completed drilling oil in

Gabon for Oil India’s Shakti Block. This was

followed by a repeat order in Gabon from

Oil India.

NUCLEAR POWER CORPORATION OF INDIA LTD (NPCIL)

Punj Lloyd has executed several projects

for NPCIL like the Process Water Piping

Packages for 2 x 220 MWe RAPP-3 & 4

nuclear power plants at Kota, primary

piping and AC & Ventilation Packages for

2 x 700 MWe Kakrapar Atomic Power

Project (KAPP) Unit 3 & 4 in Gujarat and

2 x 700 MWe Rajasthan Atomic Power

Project (RAPP) Unit 7 & 8 in Rajasthan.

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DELHI METRO RAIL CORPORATION (DMRC)

Punj Lloyd has constructed 4.78 km

of elevated viaduct and four elevated

stations on Inderlok-Mundka corridor,

Phase II for Delhi Metro. Punj Lloyd had also

constructed the viaduct from Kirti Nagar to

Tilak Nagar section for Line 3 of Delhi

Metro.

RELIANCE

Punj Lloyd has constructed the

cryogenic LPG storage and

reliquifi cation tanks for Reliance at its

Jamnagar Refi nery, has also laid pipelines

and water systems for Reliance.

BG EXPLORATION AND PRODUCTION INDIA LTDBG EXPLORATION AND

Punj Lloyd executed the civil,

mechanical and structural work for

BG Exploration and Production India Ltd

at the ONGC plant at Hazira. It also

commissioned Panna CALM buoy system.

CAIRN INDIA

Punj Lloyd has laid both crude oil

insulated and gas pipelines of varying

diameter for Cairn India. It has completed

construction of the insulated crude oil tanks

for Cairn India Ltd at Bhogat, near

Jamnagar on the Arabian Sea coast.

CALCUTTA ELECTRIC SUPPLY CORPORATION (CESC)

CESC is a part of the RP Sanjiv Goenka

Group. Punj Lloyd has executed the

design, engineering, procurement of

equipment, erection, testing and

commissioning of balance of plant

packages (BOP) for two 2 x 300 MW plants

in Maharashtra and West Bengal.

HINDUSTAN PETROLEUM CORPORATION LTD (HPCL)

Punj Lloyd laid the Mumbai Pune

Product pipeline and Pune Solapur

pipeline through the Western Ghats for

HPCL. It was also involved in the process

units comprising crude, vacuum distillation

units, visbreaking unit for 3 MMTPA

capacity expansion at Vizag.

GUJARAT GAS CO LTD

Gujarat Gas Company Ltd is the largest

private sector natural gas distribution

company. Punj Lloyd laid pipeline for the

Surat Gas Distribution Grid in 1991,

followed by sections of the Hazira

Ankleshwar pipeline, Amboli Jhagadia gas

pipeline and the Mora Sachin Palsana

pipeline.

CHAMBAL FERTILISERS AND CHEMICALS LTD (CFCL)

Punj Lloyd has delivered the DM water

plant and storage tanks and the Raw

Water Intake System for the Gadepan plant

for Chambal Fertilisers and Chemicals Ltd,

one of the largest private sector fertilizer

producers in India.

HYUNDAI HEAVY INDUSTRIES

Punj Lloyd has executed the Ravva Oil

and Gas Field Development in Oil & Gas

fi elds of S. Yanam, Andhra Pradesh and

South Bassein Hazira Trunkline.

BHARTI GROUP

Punj Lloyd has delivered over 13

projects for the Bharti Group including

project management consultancy and OFC

laying.

PETROFAC

Punj Lloyd has executed several projects

for Indian oil corporations through

Petrofac, an international provider of

integrated services to the oil, gas and

energy production and processing

industries.

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20

MENA

3.20%

2012

3.00%

3.60%

4.20%

2.40%

3.20%

6.20%

5.20%

4.90%

2013 2014 2012 2013 2014 2012 2013 2014

7

6

5

WORLD OUTPUT ASEAN

4

3

2

1

0

OUTPUT GROWTHSOURCE: IMF ESTIMATES

CHART A

8.6%

2009-10

8.9%

6.7%

4.5%4.9%

10

6

7

8

9

5

4

3

2

1

0

REAL GDP GROWTH, INDIASOURCE: MINISTRY OF STATISTICS AND

PROGRAMME IMPLEMENTATION (MOSPI), GOVERNMENT OF INDIA

CHART B

2010-11 2011-12 2012-13 2013-14

8.6%

2009-10

10

6

7

8

9

5

4

3

2

1

00

CHART B

3.20%

2012

7

6

5

WORLD OUTPUT

4

3

2

1

00

CHART A

MANAGEMENT DISCUSSION AND ANALYSIS

MA

NA

GEM

ENT

DISC

USSI

ON A

ND

AN

ALY

SIS

OVERVIEW

With primary focus on large-scale EPC

projects, Punj Lloyd Limited (‘Punj

Lloyd’, ‘PLL’ or ‘the Company’), is a global

business conglomerate with geographical

diversifi cation in a variety of services.

While positioning itself in emerging

economies, the Company has a wide

presence across countries in South Asia,

Middle-East, Africa and South East Asia.

The Company provides a bouquet of

services in Engineering, Procurement and

Construction (EPC) in the energy and

infrastructure sectors. It also provides

onshore drilling services and builds, owns

and operates infrastructure assets. It has a

state-of-the-art manufacturing, fabrication,

assembly and integration facility for

defence, aerospace systems and precision

engineering sector at Malanpur in Central

India, that has been designed on the

principle of lean manufacturing.

The businesses are carried out

through the parent Company - Punj Lloyd

Limited - and a host of other subsidiaries,

domestic and global. Today, the Group has

international offi ces in 23 countries and

workforce enveloping 37 nationalities.

BUSINESS ENVIRONMENT

World economic output remained steady

during Calendar Year CY2013 growing

at 3% and is showing early signs of

improvement in CY2014. In fact, IMF

estimates suggest world output growth will

improve to 3.6% in CY2014 (see Chart A).

The positive thrust is primarily driven by a

better performance of the US economy and

some stabilisation in Europe. There has

been some moderation in growth for

countries that constitute the emerging

economies. In CY2013, growth in emerging

economies reduced to 4.7%. Amongst

emerging economies, Punj Lloyd’s presence

is primarily in Middle East and North Africa

(MENA), South East Asia and India, where

there have been mixed signals. In MEA

output growth reduced to 2.4%, while the

ASEAN (South East Asia) region clocked

5.2% growth.

As the Indian economy entered FY2014,

the sluggishness in growth and structural

weaknesses were apparent. The trend

continued through FY2014. Real GDP

growth is estimated to be 4.9% (see Chart

B) for FY2014 with industrial growth slipping

to a paltry 0.7%.

While the long term requirement for rapid

infrastructure development in India remains

a vital necessity, the sector faces several

challenges.

Apart from various structural problems

that plague execution including a slow,

government decision-making process, and

practical issues with land acquisition as

well as the challenges of dealing with social

and environmental constraints that arise

while developing infrastructure projects, the

sector is fundamentally affected by a severe

liquidity crunch and a fi nancial squeeze. The

situation is aggravated with complexities

of the claims process, where, in an

environment of lack of decision making,

legitimate cases are also getting plugged

into the long drawn arbitration process,

strangulating the working capital resources.

Infrastructure fi nancing in India has to

work its way out of two fundamental

problems before credit lines can start to

improve signifi cantly. First, the system has

to gradually get rid of numerous excesses

of the past including aggressive bidding,

21Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014

ORDER BACKLOG

SOUTH EAST ASIA16%

SOUTH ASIA20%

MIDDLE EAST AND CIS63%

REST OF WORLD1%

CHART C GEOGRAPHIC SPREAD OF REVENUES AND ORDER BACKLOG

SOUTH EAST ASIA38%

SOUTH ASIA30%

MIDDLE EAST AND CIS31%

REST OF WORLD1%

REVENUE

weak and inexperienced sponsors, poor

project planning, high fi nancial leverage,

weak fi nancial structures and revenue over-

estimation. Second, it has to deal with the

constraints imposed by a harsh external

environment such as a slowing economy,

rising interest costs, stretched banking

exposures to the sector, diffi cult equity

markets and policy uncertainty.

Although there have been some efforts at

resolving infrastructural issues, these have

been far from satisfactory. By the end of

January 2014, the Cabinet Committee on

Investment (CCI) and the Project Monitoring

Group (PMG) had together undertaken

resolution of impediments for 296 projects

with an estimated project cost of Rs.6.6

trillion. But it is a tip of the proverbial iceberg.

By end of March 2014, 284 projects worth

Rs.15.6 trillion are under the consideration

of PMG for which issues are yet to be

resolved. Offi cial data indicates that there

has been a slight decline in the total number

of delayed central sector infra-projects.

However, 15% to 20% of these projects,

mostly in roads, power and petroleum, have

reported additional delays, for which the

dates of completion have been extended

further. Also, there has been an increase

in the number of projects without date of

commissioning, mostly in roads reflecting the

growing uncertainty about their completion.

This suggests that it may take signifi cantly

more time before these clearances result in

investment cycle turnaround.

More recently, there have been delays in

awarding infrastructure projects on account

of the run up to the general elections in

April-May 2014. One does expect that with

a new government with clear majority now

assuming offi ce, there will be some clear

direction and positive intent for this sector.

In addition, there is a signifi cant supply

side constraint in terms of availability of

skilled manpower. As the infrastructure

sector grows in India and projects become

more and more complex, there is an

inherent need for specialised skills related

to construction. Unfortunately, there

is a very limited support for such skill

training in the organised sector and the

industry faces a stiff challenge in securing

such a workforce. For Punj Lloyd, the

obstacles are even more acute because

it also undertakes several projects in

new emerging economies where major

mobilisation from outside is required.

In this environment, while continuing

to deal with external vagaries, Punj Lloyd

has strategically decided to put even

greater focus on internal processes and

capabilities. The aim is to develop an

organisation that has the operational

effi ciencies in place to counter any diffi cult

business environment. There have been

several concrete steps in FY2014 to take

on this challenge.

BUSINESS PERFORMANCE

While the focus has been on execution,

slowdown in progress of projects due to

external factors and the fi nancial squeeze

faced by construction companies like Punj

Lloyd, had an adverse impact on project

work and revenues were affected.

Consequently, the Company was in losses.

The abridged profi t and loss statement for

the Company on a stand-alone and

consolidated basis is given in Table 1.

In this backdrop, Punj Lloyd did take a

more cautious approach in bidding for new

projects, and the order backlog as on 20

May 2014 was Rs. 20,222 crore. Table 2

gives the break-up of the order backlog

and revenues in FY2014 between the

Company’s two primary business segments

of energy and civil infrastructure.

Chart C gives the geographical spread

of the Company’s revenues and order

backlog. Table 2 and Chart C best capture

the changing face of the Company’s

operations in terms of geography and

industry focus. If one looks at revenues, the

large section (87.7%) is from the energy

vertical, while in terms of future orders or

order backlog, the majority (58.0%) is from

civil infrastrcuture. Thus, given the market

opportunities, Punj Lloyd’s project profi le is

shifting from energy to civil infrastructure.

In terms of geography, while the revenues

are distributed equally between MEA, South

East Asia and South Asia, the order backlog

has a larger portion of the MEA.

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ENERGY

Punj Lloyd has grown as a Company

leveraging its core strength in delivering

energy related projects. The Company

provides EPC services for Oil and Gas

(including pipeline, tanks & terminals and

process), offshore and power (including

thermal, nuclear and solar).

Energy continues to be the largest

vertical with a share of 87.7% in revenues.

However, in terms of unexecuted order

book, its share has reduced from 61.0% to

42.0%. Within the vertical, the organisation

is divided functionally into oil and gas,

offshore and power.

Table 3 gives the details of revenues and

unexecuted order book position of these

different segments within the energy sector

in FY2014.

OIL & GAS

This segment covers the onshore

projects that includes work on fi eld

development, laying pipelines including

cross-country pipelines, process plants and

tanks & terminals. Within process plants,

the Company caters to the need for

capacity expansion with upgradation of

various units like Hydrogen and

Hydrocracker, MSQ Upgradation, Coke

Drum, simultaneously contributing to

meeting stringent environmental directives.

The Company has expertise in cryogenic

tanks besides crude petroleum storage

tanks. Table 4 gives the global value of

revenues and the unexecuted order book

across the three core divisions of the Oil

SECTOR-WISE FINANCIAL DETAILS OF THE GROUP (Rs. Crore)

Energy Infrastructure Total

Order BacklogOrder Backlog 8,498 11,724 20,222

% of Total% of Total 42.0% 58.0%

RevenuesRevenues 9,521 1,334 10,855

% of Total% of Total 87.7% 12.3%

PUNJ LLOYD’S FINANCIAL PERFORMANCE IN FY2014 (Rs. Crore)

DescriptionDescription Standalone for the Period Consolidated for the Period

FY14 FY13 FY14 FY13

Net Sales / Income from OperationsNet Sales / Income from Operations 8,229 8,366 10,855 11,256

Other IncomeOther Income 282 227 319 334

Total IncomeTotal Income 8511 8593 11174 11590

Total Expenditure (Excluding Finance Cost & Depreciation/Amortisation Expense)Total Expenditure (Excluding Finance Cost & Depreciation/Amortisation Expense) (7,483) (7,655) (10,536) (10,415)

EBITDAEBITDA 1,028 938 638 1,175

EBITDA as % of Total IncomeEBITDA as % of Total Income 12.50% 11.20% 5.90% 10.40%

Finance CostFinance Cost (771) (680) (882) (781)

Depreciation / Amortisation ExpenseDepreciation / Amortisation Expense (245) (228) (392) (354)

Profi t / (Loss) before taxProfi t / (Loss) before tax 12 30 (636) 41

TaxTax (4) (11) (8) (70)

PAT / (Loss)PAT / (Loss) 8 20 (644) (29)

Share of Associates & Minority InterestShare of Associates & Minority Interest 96 22

Profi t / (Loss) for the PeriodProfi t / (Loss) for the Period (548) (7)

TABLE 1

SECTOR-WISE FINANCIAL DETAILS OF THE GROUP TABLE 2

23Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014

FINANCIAL DETAILS OF THE ENERGY SECTOR VERTICAL – FY2014 (Rs. crore)

Oil and Gas Offshore Power Total

Order Backlog 6,372 611 1,515 8,498

% of Total 31.5% 3.0% 7.5% 42.0%

Revenues 5,674 1,695 2,152 9,521

% of Total 52.3% 15.6% 19.8% 87.7%

SEGMENTS OF THE OIL AND GAS SECTOR – FY2014 (Rs. crore)

Pipelines Tanks & Terminals Process Plants Total

Order Backlog 988 514 4,870 6,372

% of Total 4.9% 2.5% 24.1% 31.5%

Revenues 2,259 500 2,915 5,674

% of Total 20.8% 4.6% 26.9% 52.3%

FINANCIAL DETAILS OF THE ENERGY SECTOR VERTICAL – FY2014TABLE 3

SEGMENTS OF THE OIL AND GAS SECTOR – FY2014 TABLE 4

and Gas segment namely - pipelines, tanks

& terminals and process plants.

Regionally, the business is spread across

three primary zones – South Asia, South-

East Asia and Middle East and Africa (MEA).

SOUTH ASIA

In line with the general industrial

slowdown in India over the last few

years, capital investments have reduced.

The oil and gas sector has been no

exception. In an environment of decision

paralysis there have been few new projects

and progress on projects under execution

has also been hampered. In this

environment, Punj Lloyd focused on

execution with an objective of optimising

cash fl ows for the Company.

In Tankage, some of the major projects

under execution include:

Process and Utility facilities at top

side and inside cavern on EPCC

basis for Indian Strategic Petroleum

Reserves Limited located at Mangalore,

Karnataka. Despite the location in an

extremely tough terrain and heavy

rainfall causing some delays, the

underground activity is almost complete

and the client has appreciated the

progress. Mechanical completion is

expected by October 2014.

Of the several units related to the up-

gradation of Mangalore Refi nery, the

Coke Drum Structure Package was

commissioned in March 2014 and the

project is expected to close in the early

part of FY2015.

In pipelines, the Dabhol-Bangalore

project was commissioned in February

2013. Some balance work and rectifi cations

were carried out in FY2014 for completion.

The Vijaipur-Kota pipeline project for GAIL

was completed in FY2014. Progress has

been delayed in the two sections of Kochi-

Koottanad-Bangalore-Mangalore pipeline

due to non-availability of ‘Right of Way’

arising out of local issues.

The Company continues to bid in

this segment where opportunity for new

business in FY2014 was almost non-

existent.

On the process front, the Company

continued its progress with the two existing

projects for Indian Oil Corporation Limited

at Paradeep. The mechanical work of the

Indmax unit worth Rs.135 crore is expected

to close in 2014, while work on the 12

processing units on lump-sum turnkey

basis worth Rs.1,135 crore is expected to

be completed in June 2015. Punj Lloyd also

secured a small third order worth Rs.17

crore for duct procurement and erection at

this unit.

There were two successful orders

secured during FY2014. These included:

A contract worth Rs. 358 crore from

Chennai Petroleum Corporation Limited

to build the Sulphur Block of Residual

Upgradation Project at its Manali

refi nery near Chennai.

Pure construction contract worth

Rs. 275 crore for Reliance’s Jamnagar

refi nery.

Apart from these execution related

developments, Punj Lloyd also focused

on contractually closing older projects.

Positive developments on this front included

successful closure of two projects – the

Delayed Coker Unit for Vadodara refi nery of

IOCL, which had been completed in 2010

and the Motor Spirit Quality up-gradation

project at the Barauni Refi nery, which was

completed in 2012.

MIDDLE EAST

In the Middle East, on one hand, while

several older projects were completed

adding to the increased oil and gas pipeline

infrastructure, on the other hand, there were

few new projects started. Some of the

projected pipelines in the gas transportation

segment have been delayed due to a global

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fall in gas prices. While continuing to focus

on execution, Punj Lloyd has made a

strategic shift in terms of marketing. Given a

cautious and selective approach in the last

couple of years, the Company has not been

contracted for any new project in FY2014

and has now focused on further improving

internal effi ciencies to be able to

successfully compete in this market with

more aggressive pricing. Also, there is now

a greater focus on developing customer

relationships to increase participation in

negotiated contracts or projects where

greater weightage is placed on credentials

than only price.

The Company has successfully

completed all the projects in Oman.

The execution updates on various

projects are:

QATAR

Polysilicon Project – Train 1 and 2 for

There have been some delays in the

project, which are not related to Punj

Lloyd. On the positive side, engineering

of both Train-1 and 2 is 95% complete

and procurement 75%. Train - 1 is now

planned for mechanical completion in

FY15.

UAE

EPC of Shah Gas Gathering Project

– Package 1 for Abu Dhabi Gas

Development Company Limited: This

has moved from the engineering and

procurement stage to the construction

stage. The project is 90% complete and

due for commissioning in FY15.

Spiking project: The project is 99%

complete and due for commissioning

in FY15.

ADCO tie-in Field Development : This

has been a call-on / call-off project for

3 years and has been granted further

extension till FY15.

The erstwhile Simon Carves project for

Gulf Fluor: This project is 99% complete

and due for commissioning in FY15.

It includes construction of a sulphuric

acid plant.

The ENOC Project of Jet Fuel Tank

Farm and Pipeline from Jebel Ali

to Dubai International Airport: The

terminal has achieved commissioning

in FY14 and the pipeline is due for

commissioning in FY15.

SAUDI ARABIA

SATORP: The port tank farm for Saudi

Aramco and TOTAL, awarded to JV

of Dayim Punj Lloyd has achieved

commissioning in FY14.

SP2: The utility pipelines and export

pipelines for Saudi Aramco and Sinopec are

witnessing aggressive work on execution

and are expected to be completed in

FY2015 as client has awarded additional

scope.

LIBYA

TMGP & KTGP: These two projects were

under hold since the revolution started in

Libya in February 2011. While the revolution

is over, the current situation in Libya

remains volatile with several security issues.

The projects were 85% - 90 % complete.

There have been several meetings to restart

the projects. Recently, the client Sirte Oil

Company has agreed on several pending

issues with the Company and the projects

are expected to restart soon.

SOUTH EAST ASIA

Relatively speaking, there is more activity

in the Oil & Gas sector in this region

compared to Punj Lloyd’s other global

markets. Having secured some good

projects in FY2012, in the last two years,

the Company has continued to lay

emphasis on execution and timely delivery.

This has helped strengthen relationships

25Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014

with some of the key large customers who

are the primary players in the region. While

participating in regular tenders, the objective

is to build and leverage the strength of

these relationships to develop its business

as these customers invest.

In Malaysia, work on the Sabah-Sarawak

Gas Pipeline project for Petronas is 99%

complete. Gas is already fl owing but some

work on compressor stations is still on. The

project is expected to be closed in the third

quarter of FY2015. The electro-mechanical

onshore work for Vale Malaysia Minerals Sdn

Bhd is over 90% complete and the Company

is in an advanced stage of securing a small

additional order in this project.

In Indonesia, the Sumpal Expansion

Programme for ConocoPhillips has been

completed. The pipeline project included

onshore facilities and fi eld development.

In Singapore, for Shell’s lube oil blending

project, the foundation level has been

completed and the project is expected to

be closed in CY2015. Three other projects

including the work at Jurong Aromatics

Complex, the Infi neum Singa Project for

Chiyoda and the Lube Oil Tank Expansion

project for ExxonMobil are on the verge of

project closure.

For Myanmar-China Oil and Gas Pipeline,

Punj Lloyd has been working on 200 km

of the 450 km gas pipeline and 180 km

of the oil pipeline. The gas pipeline was

commissioned on 15th July 2013 and is

under full commercial use by the owner

of the pipeline. The work for oil pipeline is

more than 90% complete and is targeted

to be commissioned in the last quarter

2014. Punj Lloyd has also expanded to

bidding in other countries of the region like

Brunei and is continuing to push for new

projects through its business development

and marketing efforts. One does expect a

healthy growth in the order book in the near

future.

OFFSHORE

Punj Lloyd has been providing

engineering, procurement, fabrication

and installation services of offshore

wellhead and process platforms, including

topsides and jackets, risers, submarine

pipelines, underwater cables and single

buoy mooring systems.

Given the overall emphasis of the

Company to move into a less capital

intensive business model, there has been

a strategic shift in this division with greater

emphasis on Punj Lloyd’s core skills of

project management, engineering and

procurement. The Company is working on

reducing the capital outlay in this division.

The Company continued to focus on

executing the large number of projects

secured in FY2012. The update on the

major projects being executed is:

Gujarat State Petroleum Corporation

Limited (GSPC) awarded a contract

for submarine pipeline on lump-

sum turnkey (LSTK) contract basis.

The scope of work includes 20” OD

pipeline (Approx. 24.5 km), 10” OD

pipeline (Approx. 15 km), optic fi bre

cable and onshore work. After some

initial environment related issues,

the Supreme Court gave a go ahead

order for Stage 1 of the project. Punj

Lloyd is continuing with its work and

has fi nished the mechanical part of

the offshore contract and Gas-in has

been achieved in May 2014. The

Company has been able to successfully

execute this landmark project with

very proactive support from the

Client. GSPC followed a very effective

process to assess and settle the claims

on account of extended stay while

continuing to provide payment support

to keep the progress of the project on

track.

WO-16 Cluster & SB-14 Pipeline

Project - in Bombay High from ONGC.

The scope includes laying of 122 km

of submarine pipeline, risers and I/J

tubes, modifi cations of existing facilities,

hook-up, and testing. The project was

hit by the unfortunate accident of one of

the barges in operations. The barge has

since been salvaged but due to pipes

being lost and reordering of new line

pipes, pipe laying will only commence in

the next pre-monsoon season.

British Gas awarded a prestigious

offshore contract in the Panna oil and

gas fi elds, offshore Mumbai, India,

for the installation of Pipe Line End

Manifold (PLEM), PLEM piles and

1.54 km of 12” dia pipeline and CALM

buoy, replacing the existing Single

Point Mooring system. The project was

successfully completed and handed

over to the client during FY2014.

Composite work for laying of pipeline

(onshore and offshore) for the project

of LPG pipeline from BPCR/HPCR to

Uran over 30 km for Bharat Petroleum

Limited: While there continues to be

some issues with claims settlement,

Punj Lloyd has remobilised in March

2014 and is continuing with the project.

The project is expected to be complete

by the second half of CY2014.

Installation of three compressor units for

the platform compressor station on the

PTT Riser Offshore Platform in Thailand:

While around 96% of the project is

completed there have been some

extraneous factors that delayed the

project substantially. The Company has

demobilised and cost escalation issues

are being discussed with the client.

The Company commenced work on its

fi rst offshore contract in the Middle-

East. The project is in Al�Khafji, Saudi

Arabia from AlKhafji Joint Operations.

The project, worth Rs. 314 crore

(USD 57.75 million), is impacted by

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the change in laws and regulations in

Kingdom of Saudi Arabia. At present

work is progressing but the scheduled

commissioning in September 2014

might be delayed.

In May 2013, Punj Lloyd bagged

the B-127 Cluster Pipeline Project

in Mumbai from ONGC. The project

is worth Rs. 730 crore. Punj Lloyd’s

scope of work will include detailed

engineering design, surveys,

procurement, fabrication, load out, tie

down/sea fastening, tow-out / sail-out,

transportation, installation, hook-up,

pre-commissioning and commissioning

of 115.50 km rigid submarine pipelines

in 9 segments, relocation of existing

single buoy mooring, installation of

new PLEM along with anchor piles and

topside modifi cations of four existing

platforms. The project is delayed

owing to issues outside of Punj Lloyd’s

control. The survey and engineering

are complete and the procurement has

started.

POWER

THERMAL POWER

SOUTH ASIA

The thermal power sector has been

adversely affected by a range of issues

including socio-economic, environmental

and problems with coal linkages.

Consequently, several new projects are

stalled midway and there is a dearth of

investments in this market. Punj Lloyd’s

focus was on execution of the orders in

hand.

The major projects under execution

include:

Design, Engineering, Procurement,

Construction and testing of balance

of plant package (BOP) for 2x270 MW

Goindwal Sahib Power Project, Taran

Taran, Punjab promoted by GVK group.

Both the Units have been synchronised

and some minor fi nishing work is left for

project completion. The Full Load Trial

runs of the Units will be achieved once

the coal is available at site.

Design, engineering, procurement

of equipment, erection, testing and

commissioning (ETC) of balance

of plant packages, complete civil

work on EPC basis for 2 x 300 MW

Thermal Power Plant at Chandrapur,

Maharashtra for Dhariwal Infrastructure

Private Limited. The scope also

includes the Erection of Boiler, Turbine,

Generator and its Auxiliaries. All major

milestones have been achieved for

Unit-1, including the COD. Unit-1 has

been running successfully on full load

from March 2014 onwards. Unit-2 was

synchronised to the grid in April 2014,

achieved full load on coal in May 2014

and is ready to achieve COD.

Engineering, Procurement and

Construction project for BOP work and

ETC of main plant equipment which

includes Boiler, Turbine, Generator and

its Auxiliaries for 2 x 300 MW Thermal

Power project for CESC (Haldia Energy

Limited) located in Haldia, India. Work

has progressed well and the boiler

light up for Unit-1 was completed in

29 months. Since then, the Boiler

Chemical cleaning and steam blows for

the Unit have been completed and Unit

-1 is getting ready for synchronisation.

Unit 2, boiler light-up is expected by the

end of June -14 with a difference of 3

months after Unit-1 light-up.

Given the state of the industry in

India, the thermal power group is now

actively looking outwards for new orders.

Consequently, work on developing markets

strategically in Africa, South East Asia and

the Middle East is on.

SOUTH EAST ASIA

The projects include:

2x30 MW Adaro Power plant

in Indonesia. The project was

commissioned in FY2014 , and the

units have been successfully running

since then.

3x18 MW coal fi red power plant at

Sangatta, Indonesia for CEKIT Power

Plant. This project is in an advanced

stage of execution.

NUCLEAR POWER

As a source of power, nuclear is still a

small percentage of India’s capacity.

However, the country remains committed

to developing capacities in nuclear power.

In fact, the Department of Atomic Energy

has set targets of increasing nuclear power

generation capacity to 10,080 MWe by the

end of 2017 and 14,580 MWe by the end

of FY2021.

On the execution front, the Company

continued with its progress on both the

packages - Primary Piping Package and

Main Plant Nuclear Ventilation Package for

2 x 700 MWe KAPP Unit 3 and 4 in Gujarat

and 2 x 700 MWe RAPP Unit 7 and 8 in

Rajasthan. The projects are together worth

Rs. 858 crore and were secured in FY2012

and FY2013 respectively. Engineering and

procurement for these projects is at the

completion stage. Manufacturing of most

of the ordered items is in progress, while

pipes and pipe fi ttings have been received

at both sites. Delivery of equipment has

also commenced. At the Kakrapara site,

fabrication and erection of pipe spools is

in progress, while at the Rajasthan site,

infrastructure development work has been

completed and prefabrication work of pipe

spools has been started.

In the near term, one continues to expect

some new opportunities. Preparatory works

for approved units of Light Water Reactors

at Kudankulam in Tamil Nadu and Jaitapur

27Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014

in Maharashtra have made progress.

The Government has given approval in

principle for setting up indigenous PHWR

reactors of 700 MWe at Karnataka, Haryana

and Madhya Pradesh. For setting up of

imported Light Water Reactors (LWRs)

ranging between 1,000 MWe and 1,650

MWe, the government has in principle,

given a nod for greenfi eld sites at Andhra

Pradesh, Gujarat and West Bengal. Pre-

project activities including land acquisition

and environment impact assessment has

already commenced for some sites.

Nuclear Power Corporation of India

Limited will be announcing the EPC

Packages for Kudankulam (Tamil Nadu),

Jaitapur (Maharashtra) and Gorakhpur

(Haryana) FY2015 onwards. Punj Lloyd will

be actively bidding for major packages of

these projects.

CIVIL AND INFRASTRUCTURE

The civil and infrastructure development

business has been steadily growing

within Punj Lloyd’s overall business portfolio

over the last few years. The company is

executing projects in India, as well as in the

MEA region.

Additionally, Sembawang, the Singapore

based subsidiary, is one of the leaders in

the Singapore market with an impressive

portfolio of projects already executed.

Sembawang is actively developing its

business outside of Singapore and is

exploring both Asia Pacifi c and the Middle-

East.

Punj Lloyd Limited’s infrastructure

division, accounted for around 12.3% of the

Company’s total revenues by generating

revenues of Rs.1,334 crore in FY2014. The

segment has a much larger share of 58% in

the Company’s total order backlog, which is

worth Rs.11,724 crore.

INDIA

HIGHWAYS

In the last few years, there has been

a policy shift from cash contracts to

arrangements based on public private

partnership that involved toll or annuity

based Build-Own-Transfer contracts. Given

the risk profi le of such projects, Punj Lloyd

has been less aggressive in bidding. The

industry did witness aggressive bidding

and several of these projects bagged by

developers turned to be non-economical.

Consequently, there have been projects

where developers have withdrawn and

implementation has not been as planned.

In this light, there is a reverse trend to more

EPC projects where Punj Lloyd will have

more opportunities to bid.

In this environment, Punj Lloyd’s stress

was on execution.

On the execution front:

The 140 km two-laning of the Khagaria-

Purnea (Bihar) section of NH 31,

which was taken on BOT basis by a

Special Purpose Vehicle (SPV) of Punj

Lloyd Infrastructure Limited (PLIL)

and contracted to Punj Lloyd, was

completed during FY2014.

Three of the six packages in Assam

for NHAI have been completed while

the others are in different stages

of completion and are likely to be

completed by the end of FY2015.

These projects are old due to being

severely hampered by a long monsoon

period of 8 months in a year and land

acquisition issues continued to plague

smooth construction as ‘Right of Way’

in some stretches has still not been

handed over.

BUILDINGS

Given the market opportunities, in the last

couple of years, Punj Lloyd had increased

its thrust on construction of buildings

like hospitals, educational institutions, IT

parks, residential buildings and commercial

centres. This was also a segment where

growth could be achieved with relatively

lower fi xed capital investments. While the

order book is healthy, the Company has

faced issues related to execution in several

of these projects. Many of these delays

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are due to external factors but some of it

is also attributable to ‘teething factors’ for

Punj Lloyd in developing core expertise in a

new sector. In this backdrop focus was on

completing and exiting projects.

During FY2014, the Company completed

the Ascendas International Tech Park

project in Pune. The main building of the

Raipur medical college for AIIMS was

completed and handed over to the client.

It was offi cially inaugurated on 28 February

2014. The hostel and other related facilities

are expected to be completed in FY2015.

The Company is also in the advanced stage

of completing the ASF IT Park – a SEZ

located in Gwal Pahari, Gurgaon.

The foundation stone for the Rs.1,300

crore Delhi Police Residential Complex at

Dheerpur, Delhi was laid in July 2013. Pre-

project activities have already started and

work is expected to commence soon.

METRO AND HIGHWAYS

Punj Lloyd has been executing different

sections in the Bangalore Metro Project

across different lines and phases. In

total, the company is constructing eight

stations in three Reaches. During FY2014,

the Company completed work on three

elevated metro stations i.e. Rajajinagar,

Kuvempu and Malleshwaram in Reach-3.

The stations were inaugurated in February

2014. The three elevated metro stations

namely Mysore Road Terminal, Deepanjali

Nagar and Magadi Road Stations in

Reach-2 are expected to be completed

by the end of the fi rst half of FY2015. The

company had already completed two

stations i.e. M.G. Road and Trinity Circle

Terminals in Reach-1. In addition to these,

the Company also secured the project

to build the Plaza building in MG Road,

Bangalore as an addition to Reach 1. Work

on this is in progress.

Given the expertise developed from

the Bangalore Metro project, Punj Lloyd

has identifi ed rapid transport systems as

a segment with good growth potential.

The Company continues to develop

competencies and bid for more work

across India.

AIRPORTS

Punj Lloyd is executing work worth

Rs. 264 crore for building a new airport at

Pakyong, Sikkim. This project is regularly

affected by heavy rainfall in the region,

which has hampered progress. In addition,

the project has been affected by certain

local agitations. Consequently, the company

has demobilised manpower and is set to

return to work post the monsoon season to

complete the project by middle of 2015.

MIDDLE EAST AND AFRICA (MEA)

Governments across this region have

been emphasising on widespread social

and physical infrastructure development.

Much of this is a reaction to the Arab Spring

uprisings and the realisation of the need to

meet the aspirations of the population at

large. While this has led to several

opportunities for infrastructure development

companies, competition has also been

intense. It has been imperative for Punj

Lloyd to focus on internal effi ciencies to bid

competitively in the segment and garner

projects. In fact, a key development for Punj

Lloyd in FY2014 has been the emphasis of

developing the entire civil and infrastructure

business in international markets with a

much more focused approach.

There have been positive developments

both in terms of execution and business

development. In the volatile Libyan market,

Punj Lloyd reactivated the fi ve infrastructure

projects worth US$ 812 million and

commenced work on two of them. However,

the push into Libya is not very aggressive

and project progress is continuously

monitored with the work being continued as

long as the payments are received from the

clients. No additional fi nancial risks are being

undertaken by Punj Lloyd.

The civil package of the Falcon project

was successfully completed on time at

rates lower than the market value with

better margins. On the civil work for the

Polysilicon project in Qatar, execution has

been exemplary. The client has appreciated

29Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014

the efforts and given the ‘best team’ award

to Punj Lloyd while recommending the

project manager to lead the entire project.

Additionally, fi ve levels of construction of the

main production hall were completed in a

record time of 33 days and overall 7 million

safe man hours of construction work was

achieved.

The Company also successfully secured

two new orders:

US$ 540 million (LYD 665.7 million)

new work order for the construction of

integrated infrastructure work of Zliten

City in Libya consisting of road work,

sewage, storm water, drinking water,

electricity, telecommunication and gas

network for an area of 2,450 Ha for

the Housing and Infrastructure Board,

Libya.

Letter of Award for the construction

of 42 km, 2x3 lane dual carriageway

project between Doraigh and Noubat

Dokaim from Ministry of Public Works

& Highways, Republic of Yemen. This

project, valued at Rs.1,270 crore (USD

211.41 million), is funded by Saudi

Development Fund (SDF). Located

60 km from the port city of Aden,

the scope of work for this project

comprises construction of 210 lane-km

new carriageway greenfi eld project.

The work involves excavation of over

10 million cubic meter, road paving,

surface sealing, two major concrete

overpass bridges, box and pipe

culvert construction and associated

infrastructure work.

SEMBAWANG ENGINEERS ANDCONSTRUCTORS PTE LIMITED

Since its establishment in 1982,

Sembawang has steadily grown to

become one of the leading Engineering,

Procurement and Construction companies

of Singapore. Today, the Company is

registered with the Singapore Building and

Construction authority as a Grade A1

category player for both general building

and civil engineering work. This allows it to

undertake projects of high value.

Over the last few years, Sembawang

has spread its global presence outside of

Singapore into Malaysia, Indonesia, Hong

Kong SAR, the People's Republic of China,

India, United Arab Emirates and Bahrain.

The Company specialises in handling

a diverse spectrum of technologically

complex projects in the niche areas of mega

infrastructures, high-rise buildings and utility

work, such as power and water plants. The

group has world-class competency across

a full range of engineering disciplines and is

an established leading turnkey contractor

capable of providing technology-based

solutions and quality products and services.

It is also able to undertake projects under

the build-own-operate and the build-own-

operate-transfer bases.

While enjoying a leadership position in

its home market in Singapore, it has rich

experience in other parts of South-East

Asia and the Middle-East, which has

helped in achieving a strong reputation

for its ability to execute state of the art

construction methods and more importantly

complete work on time. The Company

offers a complete range of services

including master planning, concept design,

detailed engineering design, development

management, construction management

and main contracting.

With the successful completion of

existing projects, Sembawang continued to

deliver strong revenue. Since the second

half of FY2013, the Singapore market

has started witnessing strong cut-throat

competition with aggressive entry of other

Asian players. This has put severe pressure

on securing new projects and maintaining

margins. To combat this development,

Sembawang actively continued to pursue

growth opportunities in newer segments.

The Company is also actively pursuing

project management assignments for large

projects in the Middle East.

Details of projects executed and under

execution during FY2014 in the civil

infrastructure and buildings segment are

30

SEMBAWANG’S CIVIL INFRASTRUCTURE AND BUILDINGS PROJECTS EXECUTED/UNDER EXECUTION IN FY2014 EXECUTED/UNDER EXECUTION IN FY2014

Description of ProjectDescription of Project ClientApproximate Original

Contract Value

Shatin Central Link (SCL), Contract Shatin Central Link (SCL), Contract 1106 Diamond Hill Station, Hong Kong1106 Diamond Hill Station, Hong Kong

MTR Corporation Ltd SG$ 260 million

New Prison Headquarters for Changi New Prison Headquarters for Changi Prison Complex, SingaporePrison Complex, Singapore

Singapore Prison Services SG$ 118.5 million

McNair Towers in Kallang Whampoa McNair Towers in Kallang Whampoa precinct Contract C20C, Singaporeprecinct Contract C20C, Singapore

Housing and Development Board of Singapore

SG$ 106.6 million

MRT Downtown Line 2 MRT Downtown Line 2 Contract C919, SingaporeContract C919, Singapore

Land Transport Authority SG$ 378.2 million

MRT Downtown Line 1, MRT Downtown Line 1, Contract C906, SingaporeContract C906, Singapore

Land Transport Authority SG$ 463 million

Resort World Sentosa Resort World Sentosa Contract MC06, SingaporeContract MC06, Singapore

Resorts World Sentosa Pte Ltd

SG$ 419 million

SEMBAWANG’S ENVIRONMENT WORKS PROJECTS EXECUTED/UNDER EXECUTION IN FY2014

Description of ProjectDescription of Project ClientApproximate Original

Contract Value

Lower Seletar Waterworks, SingaporeLower Seletar Waterworks, Singapore PUB SG$ 180.6 million

Service and Maintenance Contract 2 at Service and Maintenance Contract 2 at Changi Water Reclamation Plant, SingaporeChangi Water Reclamation Plant, Singapore

PUB SG$ 7 million

SEMBAWANG’S ENVIRONMENT WORKS PROJECTS EXECUTED/UNDER EXECUTION IN FY2014TABLE 6

SEMBAWANG’S CIVIL INFRASTRUCTURE AND BUILDINGS PROJECTS EXECUTED/UNDER EXECUTION IN FY2014

TABLE 5

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given in Table 5.

Details of projects executed and

under execution during FY2014 in the

environmental work segment are given in

Table 6.

ENGINEERING

As Punj Lloyd evolves its business with a

reoriented business strategy that lays

considerable stress on internal processes

and systems, the engineering business is

expected to play a critical role in providing

the organisation with a key competitive

edge in the market.

In the last 8 years, Punj Lloyd Group has

strongly focused in building best in class

multi discipline engineering capabilities. The

Company has developed its engineering

competencies to not only support internal

projects but to offer engineering services

to external customers as well. The external

work is done through its subsidiary, PL

Engineering Limited (PLE), a full spectrum

design and engineering company with

multiple offi ces across the globe.

human factor engineering, safety and

green technology. PL Engineering has

constantly gone up the value chain by

moving from detailed engineering to

Front End Engineering Design (FEED) and

Engineering, Procurement, Construction

and Maintenance (EPCM). It has secured

some contracts in these areas from

customers like GAZPROM, Dow and

Cairn Energy. In addition, PL Engineering

aspires to become a technology company

with signifi cant intellectual property (IP) in

areas of competencies such as LDPE and

Petrochemicals.

PL Engineering had entered FY2014 with

a modest order book and the Company

Today, the organisation provides

services across industries including

energy, petrochemicals, infrastructure

and engineering products in defence and

aerospace. With offi ces in Abu Dhabi,

Manchester and Gurgaon and employee

strength of more than 700 engineers, PL

Engineering operates through a network

of integrated multi-cultural delivery centres

in India and abroad. This enables it to

showcase its client facing technology

offi ces with a world class cost competitive

delivery centre in India.

It is focused on delivering value to all

internal and external customers through

value engineering, design incorporating

31Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014

has successfully executed these orders

resulting in a turnover of Rs. 192 crore in a

tough environment. The Indian economic

slowdown and limited opportunities globally

has impacted scope for new projects and

the business pipeline of PLE.

Inspite of this, PL Engineering has

succeeded in securing some key new orders

in FY2014 and will be going into FY2015

with a strong order backlog. These include

a large order from DOW and LDPE (USA).

Additionally, the Company is aggressively

pursuing a number of signifi cant prospects,

globally, with a reasonable chance of

securing the orders. The Company has

also intensifi ed its business development

efforts, by expanding the BD team globally.

PL Engineering has also been empanelled

with a number of signifi cant National and

International Oil Companies operating in

Middle East, thus increasing opportunities to

win business in the region.

PL Engineering also operates in the

product engineering space through its JV

named AeroEuro Engineering (India) Private

Limited, a JV between PLE and GECI of

France. Apart from working in Aerospace,

Aeroeuro recently started product

engineering design in the Defence sector.

PL Engineering continues to work

on stabilising the order book with more

emphasis on annuity type of businesses.

The focus is on targeting mid-sized clients

in Middle East, North Africa, Europe and

America, who do not have their own captive

engineering facility in India and providing

them an ODC with a dedicated team of

engineers. PL Engineering is also focusing

on the ‘Go Green’ initiatives of the clients

that stress on value engineering at the design

stage for more energy effi cient operations.

OTHER BUSINESSES

In keeping with the Company’s

entrepreneurial drive, Punj Lloyd

continues to explore new opportunities and

invest in businesses where it has

competitive advantage in terms of fi nancial

strength, business linkages, internal skills or

key relationships. The various activities are

in different stages of their initial development

phase. Together, these businesses have

been classifi ed as ‘other businesses’. They

include infrastructure, manufacturing &

defence and upstream operations.

PUNJ LLOYD INFRASTRUCTURE LTD

Punj Lloyd Infrastructure Limited (PLIL)

was reoriented as the Project

Development arm of Punj Lloyd Group in

2010 to leverage Punj Lloyd’s core EPC

strengths and extend the business to asset

ownership. Since this business is highly

capital intensive and has risks spread over a

longer gestation period, PLIL’s business

portfolio has been cautiously developed

with strong planning and project

development skills to achieve higher

profi tability while minimizing its risk

exposure.

Given the slowdown in activities across

the infrastructure sector in India during

FY2014, PLIL focused on executing existing

projects and selectively bidding for new

projects.

In terms of execution, PLIL through

its wholly owned SPV, Khagaria Purnea

Highway Project Limited (KHPL) has

completed the NHAI Road project in Bihar,

fi ve months ahead of schedule. The work

involves two-laning with paved shoulder of

the Khagaria-Purnea section of NH-31 from

270 km to 410 km. This is being executed

as BOT (Annuity) project on DBFOT basis

under NHDP Phase III.

During the year, PLIL has secured a 20

MW solar power project in Punjab. It has

executed a 25 year power purchasing

agreement (PPA) with the Punjab State

Power Corporation Limited. The company

has also secured fi nancing for the project

and completion of the project is envisaged

during FY2014-15.

Today, the asset portfolio, projects

completed and under development, of the

company is around Rs 2300 crore. Going

forward the company would selectively

target projects in infrastructure and energy

sectors domestically and in selected

international geographies including Africa.

MANUFACTURING AND DEFENCE

Punj Lloyd has set up a Manufacturing

System Integration Division, which is a

65 acre facility at Malanpur, Gwalior (Madhya

Pradesh). It is well equipped to carry out:

Precision machining, welding &

fabrication of aerospace and land

system components of large bed size

Assembly & system integration and

testing

Maintenance and repair for Defence

system

While the unit caters primarily to the

defence and aerospace sector, it also

manufactures components for other

engineering sectors like power and

transportation to balance capacities and get

optimal machine utilisation.

As a part of long term strategy the fi rst

phase of development included optimally

organising the machine layouts and

securing necessary accreditations. This

stage was completed in FY2014 and today,

the plant is accredited with ISO 9001

(Quality Management System), ISO 14001

(Environment Management System), OHSAS

18001 (Safety Management System), ISO

50001 (Energy Management) and AS9100C

(Quality for Aerospace Standards).

The manufacturing division is now

moving to the next phase of developing

diverse manufacturing expertise, building a

business development and execution team

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and creating a strong vendor base to attain

a high level of productivity. Punj Lloyd has

focused on defence and aviation related PSU

companies to generate a basic order book

level. This has resulted in building strong

relationships with companies like Hindustan

Aeronautics Limited. The manufacturing

business has also been extended to service

some of the component manufacturing

needs of Punj Lloyd’s core construction

business. To begin with, the focus has been

on energy. The Company has worked for

components primarily in nuclear power, wind

power and hydro-power. It is also in the

process of developing customer relations

in the oil and gas, aviation, shipping and

transportation systems.

In defence component and equipment

manufacturing, Punj Lloyd intends to

leverage the fact that there is capacity

constraint amongst government entities

and the armed forces are actively looking

at developing indigenous manufacturing

capability in the private sector. There are also

opportunities expected as the offset clauses

given in foreign supplier’s contracts start

getting implemented. These clauses impose

a condition for local purchase of a certain

percentage of components for any project.

Punj Lloyd has recently signed an MoU with

Fincantieri for meeting their offset obligations

in India. Fincantieri is an Italian shipbuilding

company, which had manufactured ‘supply

ships’ for the Indian Navy.

In FY2014, the Company continued to

actively focus on business development. In

the Air Defence Gun upgrade programme,

Punj Lloyd’s product has cleared trial and

commercial negotiations will begin shortly. It

has submitted proposals for self-propelled

air defence gun missile systems, wheeled

APC and up-gradation programme for

the 130mm barrel gun. The Company

continues to engage with the DRDO, the

Ordnance factories and other Public Sector

Undertakings for defence related work. It

has also responded to the programme for

upgrading the MIG 29 of the Indian Air Force.

It has signed an MOU with an

international OEM for developing warship

components. Applications have also been

made for licenses to augment defence

capabilities and support shipbuilding.

UPSTREAM OPERATIONS

Punj Lloyd Upstream was established in

2007 to cater to the business of oilfi eld

services. With internationally experienced

crew of drillers and technicians credited

with completing complicated drilling

programs in diffi cult and diverse terrain,

Punj Lloyd Upstream has been operating

two new US made onshore rigs. One of the

rigs is deployed in Libya, the other is

operating in Gabon.

While the revolution in Libya is over, the

country continues to face regional, tribal,

and militia issues that have hampered the

export of oil, which is the life and blood of

the country and the predominant source

of income for the nation. Consequently,

the political uncertainty and lack of central

authority on the ground has resulted in

oil production reducing from highs of 1.6

million barrels a day to around 150,000

barrels a day. Against this backdrop of

political uncertainty marred with intermittent

violence and frequent halting of operations

by oil companies, Punj Lloyd Upstream’s

rig, which was the fi rst international rig to

start production after the revolution, has not

been operational on a regular basis for most

of FY2014.

The other rig is operational at Gabon,

Africa, where it is drilling for Oil India in the

Shakti block. Punj Lloyd Upstream’s efforts

in Gabon have yielded to an oil discovery

in Gabon for OIL, which is their fi rst ever

international discovery. The contract for

drilling is extended to 2 more wells, and the

contract ends in Q3 2014.

Punj Lloyd Upstream has high quality

new assets, which have operated for 10-

15% of their life span. While one expects

compensation and a return to optimal

production in Libya, the political turmoil

remains uncertain. Punj Lloyd Upstream’s

contract in Libya ends in June 2014, and

the company has bid this rig in various

markets in Africa, Middle East and India.

Once operational on a continuous basis

for 2-3 years, the return from operations is

more than suffi cient to pay back the debt

on the books for purchasing the rigs, post

which the rigs shall earn consistently high

margins with no fi nance costs.

Punj Lloyd Upstream has recently

been awarded a 2 year contract by OIL

for operations in Assam, NE India. Going

forward, given the sea-change in the

dynamics of the drilling business in India,

the company is extremely well positioned

to deploy additional rigs in the market in

33Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014

its quest to acquire a dominant leadership

position in the oilfi eld services space.

OPERATIONS : SUPPORT SERVICES

The Company’s business operations are

backed up by corporate support

services. Some of these are outlined below.

PROCUREMENT

Optimising the procurement function is

seen as a key operational tool to further

enhance the Company’s effi ciencies and

compete in a diffi cult market.

The entire transformation is being

done through a well-structured change

management process. The objective is to

create a strong central procurement team

that has full-proof processes and controls to

effectively source materials and services for

the Company with minimum leakages.

To begin with, the work is underway

to create an umbrella organisation under

central procurement that will defi ne policies

and guidelines and provide supervisory

control on all procurement team at the site.

The entire basket of purchases has been

divided into seven groups and optimal

practices are being set up for each group.

The systems and controls are being

integrated into the IT system and will be

implemented through the ERP platform.

By the middle of FY2015 the entire vendor

management to material delivery will be

brought under this platform.

The process aims to build clear cut

communication with team members in a

stage-wise manner, strong follow up based

on MIS, establishment of optimal SLAs with

all external service providers and evaluation

of outcomes with quantifi able deliverables.

Much of this process is about changing the

way of working and the transformation is

being rolled out with active support of the

HR function.

HUMAN RESOURCE (HR)

Human Resources play a critical role in

organisational success. At Punj Lloyd all

HR policies and practices are completely

aligned with the overall organisational

strategy.

In order to gain competitive edge in

the industry, all HR initiatives are aimed

at developing the human capital to

address critical business challenges and

identiFYareas of opportunity and risk. Our

key initiatives include:

The major initiatives include:

CAPABILITY BUILDING

An important part of the HR function is

to identify and bridge the gaps in skills

and knowledge base of the Company’s

human resource to meet the business

requirements. Punj Lloyd has well rounded

capability development programmes

that stress on training as well as talent

development.

The training initiatives continued to be

undertaken at all levels – for management

level as well as for the skilled worker. On

average, 1.54 man days per employee

of training was imparted in FY2014. This

covered a whole range of subjects like

procurement, fi nance, project management,

planning, contract, presentation skills,

business writing skills, project risk evaluation,

spiritual leadership and values workshops.

The key managerial programmes

included Frontline Leadership Transition

and Operational Leadership Transition

programmes designed to equip middle and

aspiring managers to face new challenges

in the changing business environment.

They also facilitated on the job learning

and provided a unique opportunity to learn

something beyond the assigned day to day

responsibility.

Some of the fl agship programmes

organised in FY2014 were : Advance Project

Planning & Control and EPC Business

Simulation. These programmes provided a

detailed understanding of project planning,

analysis and control and enhanced the

business acumen of employees.

While most of the capability building

programmes were classroom-based, there

continued a plethora of HSE trainings at

site like Fire fi ghting and prevention, Heat

Stress, Insulation work, Working at Height,

OHSAS Awareness, Safety in Scaffolding

which were a mix of class-room and hands-

on learning.

ORGANISATION DEVELOPMENT

FY2013-14 saw increased stress on

succession planning with workshops on

individual development plan creation and

coaching for employees across the globe.

Employee Engagement: In order to enhance

transparency and provide a platform for

employees to voice their concerns, town

halls were held with employees by the top

management.

An online feedback desk called ‘CEO

Konnect’ was established whereby any

employee across the globe could directly

voice their concern, query or suggestions

to the CEO.

HEALTH, SAFETY AND ENVIRONMENT (HSE)

At Punj Lloyd, HSE is internalized into

day to day operations across all sites.

The Company is committed to adopting the

best in class HSE practices. The Company

has certifi cation for three management

systems: OHSAS 18001:2007 -

Occupational Health & Safety Management

System, ISO 14001:2004 - Environment

Management System and ISO: 9001-2008

- Quality Management System. Assurance

for on ground practice and veracity of these

standards is provided by periodic audits at

projects conducted by a third party agency

34

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- Det Norske Veritas. These audits are also

undertaken at the corporate level.

An integrated management system

manual has been approved and is now

available for regular reference besides being

available to all employees through a web

based platform.

On the path of continual improvement,

Root Cause Analysis approach was adopted

for analyzing high potential incidents. The

focus was given on the incident irrespective

of its outcome. This helped to identiFYand

correct the root causes of the incidents,

as opposed to simply addressing their

symptoms resulting in prevention of

undesirable incidents from recurring.

In order to inculcate safety awareness

amongst all, health safety tips and legal

awareness tips were circulated to all

project sites as well as corporate offi ces.

Communication material i.e. banners,

pledges and badges, are distributed at sites

and corporate offi ces to create awareness

on the occasion of World Environment Day,

World AIDS Day and Safety Week.

Some client recognitions listed below

compliment the initiatives and efforts made

to achieve a safe working environment.

The spiking gas compressor project

achieved 5.0 million safe man-hours

(Without LTI) on 17-04-2014

The Qatar Polysilicon project achieved

11.5 million safe man-hours by

December 2013

Myanmar - China Oil & Gas Pipeline

and Stations project achieved 7 million

safe man-hours without LTI

Bhogat Tankage project achieved 5

million LTI free man-hours in April 2013.

KSK Power Project in Chhattisgarh

achieved more than 9 million LTI free

man-hours in December 2013

Paradip Indmax project achieved 5

million LTI free man-hours including

best contractor award in HSE

implementation and 1st prize in

housekeeping competition.

ISPRL project in Mangalore achieved

3 million LTI free man-hours in October

2013.

MRPL-CDSP project in Mangalore

achieved 6 million LTI free man-hours in

March 2014.

INFORMATION TECHNOLOGY (IT)

In order to enhance the role of IT as a

business partner, the focus from FY2014

has been to reestablish strong controls in

the system, which is in line with the

management process change that is

currently under way.

As a fi rst step, all projects have been

brought into the Oracle system with

a budgetary control put in place. This

system now automatically blocks out of

budget transactions. A dash board has

been created across all projects to give

a daily update on project status across

select parameters for senior management

to monitor, evaluate and take objectively

informed actions.

From an approval hierarchy perspective,

major changes have been institutionalised in

the system and strong controls have been

put from the leadership level. From a data

leakage perspective, while copying fi les

and sending out attachments are allowed,

the system is made full proof through a

continuous monitoring mechanism of all

email info and data copying and external

drives. Any suspect activity is immediately

reported and explanations are sought from

the person concerned.

These initiatives are also being

supplemented with an awareness campaign

to sensitise the employees on the role of IT

as a business partner.

To support business prerogatives,

inventory management has been initiated

through the ERP system only for better

tracking and controls. Small applications

like a data repository for corporate

communication or travel request and

booking support systems have been

developed that enhance the effi ciency of

day to day activities.

With a well-structured roadmap for IT

at Punj Lloyd, the Company has placed

an order with RAMCO systems for the

HR management systems application.

This will help manage and monitor people

related transactions and activities right up

to the site levels across geographies. As a

next step, a re-implementation of the ERP

system, to upgrade it to today’s business

needs is also being evaluated.

CONSOLIDATED FINANCIALPERFORMANCE

Punj Lloyd Group recorded a decrease

in Gross Income by 3.6% at Rs. 11,174

35Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014

crore as against Rs. 11,590 crore in the

previous fi nancial year. EBIDTA reduced to

Rs. 638 crore as compared to previous year

EBIDTA of Rs. 1,175 crore.

Increase in Financing Charges by 12.9%

at Rs. 882 Crore over the previous year’s

fi gure of Rs. 781 further contributed to the

loss of Rs. 548 Crore as against Rs. 7 Crore

loss in the previous fi nancial year

RISK

Punj Lloyd executes infrastructure

projects that often have long life cycles

and there is exposure to a wide variety of

different kinds of risks across this time

frame. In addition to this, there are risks

associated to operating in different

geographies in terms of terrain, socio-

political and engineering factors. In a

competitive market environment like the one

that prevails today, in order to secure

projects and generate profi ts one needs to

strike a very fi ne balance between returns

and risks. In fact, proper identifi cation and

management of risks go a long way in

determining the ability of the organisation to

sustainably deliver projects on time and in

line with customer expectations.

Consequently, management of risks is a

very important part of Punj Lloyd’s business.

This is done at two levels. First, there is

a macro perspective of risks charted out

to defi ne business strategy and infl uence

decisions being undertaken at a strategic

level. Second, risk management is an

inherent and integral part of operations at

Punj Lloyd, which governs the execution of

each individual project. At both levels, the

company has a robust risk management

system that encompasses people, process

and technology. However, these systems

get periodically upgraded to meet business

needs.

At the organisation level, there are clearly

defi ned roles for the senior management

in terms of timely identifi cation, mitigation

and management of risks. Across the

organisation, there are risk management

teams which are responsible for managing

and reporting of risks to senior management.

Each project goes through a detailed risk

evaluation and risks are tracked through

the three stages of project lifecycle: sales

decision process, bidding and estimation

processes, and the project execution

process. The risks are managed through an

established process of risk management.

In today’s environment, at a macro level,

some of the major external risks affecting

the Company are:

MARKET RISKS

As the global economy recovers from

the prolonged downturn, large ticket

infrastructure spends will take time to kick

in. Consequently, demand for construction

service globally is down and in pockets

where there is demand, one fi nd stiff

competition from players trying to get most

of a shrinking pie. Consequently, companies

are exposed to signifi cant market risks in

terms of not securing orders or securing

orders at very competitive prices that put

pressure on margins.

INTEREST PAYMENTS

Punj Lloyd’s balance sheet does refl ect

a high debt component and the interest

burden on account of the same consumes

a high portion of the operating earnings of

the Company. The Management is working

on various fronts to lower the debt levels

and bring down the interest burden. Interest

rates continue to be at fairly high levels in

the backdrop of a tough monetary policy

adopted by Reserve Bank of India (RBI)

to tackle infl ation. Although indications

suggest infl ation is easing, the effect on

interest rates will take time.

LIQUIDITY

Today, the most diffi cult risk is that of a

liquidity crunch. Faced with tough fi nancial

conditions, most customers, including

Government players are fi nding it diffi cult to

make timely payments. Several contractual

issues are getting dragged into arbitration or

judicial intervention leading to a signifi cant

increase in claims. There are inordinate

delays in claims’ settlements; and these

delays are locking-in a large chunk of the

Company’s capital.

With pressure on collections in an

atmosphere where order book growth is

affected and interest rates remain high, most

construction companies like Punj Lloyd are

majorly affected by issues related to liquidity.

This is a vicious cycle where one of these

external factors needs to ease out to sustain

business. Internally, Punj Lloyd has been

extending all its efforts to adopt a project

delivery model that is as light as possible

in terms of capital intensity with an effort

to self-fi nance projects with effi cient cash

management. Special emphasis is being

laid on improving contract management and

dealing with claims.

POLITICAL

In order to secure business in today’s

environment, the Company is entering into

new markets in Africa, Middle East and

Latin America. Many of these geographies

have an inherent risk of socio-political

uncertainty. While Punj Lloyd continuously

evaluates such risks, it has to take certain

calculated strategic decisions as many of

these markets is where major infrastructure

development is taking place and is lucrative

business wise.

INTERNAL CONTROLS SYSTEMS

In Punj Lloyd Limited, the Group Internal

Audit Division along with outsourced

audit partner KPMG, continuously monitors

the effectiveness of the internal controls

with an objective to provide to the Audit

Committee, an independent, objective and

reasonable assurance on the adequacy and

36

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effectiveness of the organisation’s risk

management, control and governance

process. Group Internal Audit Division

develops an audit plan / schedule based on

the risk profi le of business activities are

prioritised for audit accordingly.

The Audit Division also assesses

opportunities for improvements in business

processes, systems and controls; provides

recommendation designed to add value

to the organisation and follows up on the

implementation of corrective actions.

The scope and authority of the Group

Audit Division is derived from the Audit

Committee. The audits are scheduled in

a manner that audit plan is focussed on

following objectives:

All operational and related activities are

performed effi ciently and effectively

Checking and verifying the key fi nancial

and operational controls

Signifi cant fi nancial, managerial and

operating information that is relevant,

accurate and reliable is provided on

time.

Employees actions are in accordance

with the company’s policies and

procedures, applicable laws and

regulation

Signifi cant legislative and regulatory

provisions impacting the organisation

are recognised and addressed

appropriately

The internal audit function works closely

with the outsourced partner to develop

internal fi nancial & operational control

framework and provide independent and

objective assurance to the Audit committee

and the Executive Management on the

system of internal controls deployed in the

group and provides a systematic, disciplined

approach to evaluating and improving the

effectiveness of risk management, control

and governance procedures.

FUTURE OUTLOOK

While there will be some improvement in

growth, economic conditions are

expected to remain uncertain globally in the

next 2 to 3 years.The global EPC market

will remain highly competitive. While the

order book has reduced, it is still at a fairly

healthy level. FY2015 will witness revenue

growth as the Company focuses on

executing this order book. Successful

completions and cash collections will be

important in creating the cash fl ows

necessary to sustain the diversifi ed growth

objective.

Punj Lloyd has already identifi ed that

there will be severe competition and

pressures in securing new orders. It

has launched a major internal effi ciency

improvement programme to create a

lean organisation that can take on this

competition. One expects tough decisions

on the execution front as the Company

gears to meet these challenges. Today,

the Company has much greater internal

improvement focus and the early signs are

positive. These improvements will enable

the Company to emerge from the economic

downturn as a much better organisation

ready to deal with opportunities of

tomorrow.

Each vertical has specifi c opportunities

and the Company is working on optimal

methods of prospecting for these and

turning them into long term revenues for

the Company. One expects early signs of

improvements in the infrastructure sector in

India as the new Government takes offi ce.

However, the turnaround will take a little

time. The Company remains cautiously

optimistic about its prospects in FY2015.

CAUTIONARY STATEMENT

The management of Punj Lloyd has

prepared and is responsible for the

fi nancial statements that appear in this

report. These are in conformity with

accounting principles generally accepted in

India and, therefore, include amounts based

on informed judgments and estimates.

Statements in this Management Discussion

and Analysis describing the Company’s

objectives, projections, estimates and

expectations may be ‘forward looking

statements’ within the meaning of

applicable laws and regulations. These have

been based on current expectations and

projections about future events. Wherever

possible, the management has tried to

identiFYsuch statements by using words

such as ‘anticipate’, ‘estimate’, ‘expect’,

‘project’, ‘intend’, ‘plan’, ‘believe’ and

words of similar substance in connection

with any discussion of future performance.

Such statements, however, involve known

and unknown risks, signifi cant changes in

political and economic environment in India

or key markets abroad, tax laws, litigation,

labour relations, exchange rate fl uctuations,

interest and other costs and may cause

actual results to differ materially. The

management cannot guarantee that these

forward-looking statements will be realised,

although it believes that it has been prudent

in making these assumptions. The

management undertakes no obligation to

publicly update any forward-looking

statements, whether as a result of new

information, future events or otherwise.

37Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014

38

CORPORATE SOCIAL RESPONSIBILITY

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Punj Lloyd’s business ethos has always

focused on adopting sustainable

practices and creating value for a wide

spectrum of stakeholders. Many of these

have been achieved through the Corporate

Social Responsibility (CSR) initiatives. The

slew of activities include interventions

related to the environment, labour welfare,

community development, social welfare and

industry thought leadership. Many of the

efforts have already been institutionalised

and they continue to develop and reach out

to a larger community. Some of these on-

going CSR programmes include:

Skill development through training

Provision of high quality education

Medical services including free health

check-ups

Building infrastructural support

Preserving the local fl ora and fauna

In many ways, the Company’s CSR

programmes have been unique and

pioneering efforts in their domain. In India,

there have been several notable and

impactful social activities undertaken at

the Company’s major sites. Most recently,

at the Company’s fi rst solar power plant

development in Bap (Western Rajasthan),

Punj Lloyd had undertaken harvesting

rain water through the construction of

‘taankas’ at select locations across the

region. The Company has also developed

‘Life Enrichment’ a programme, which

incorporates holistic approaches to

healthcare, family planning, living conditions,

nutrition and personal empowerment of the

migrant workers at its project sites.

Punj Lloyd was the fi rst company to fund

the Indo-US Corporate Initiative for HIV/

AIDS in Medicity, a multi-specialty medical

institute in Gurgaon, India. The goal was

to launch an awareness campaign which

aimed to arrest the spread of this deadly

epidemic. Since then numerous HIV/AIDS

prevention workshops have been held at the

Company’s sites across the globe.

In FY2014, in addition to the ongoing

interventions, the Company focused on two

activities to generate meaningful impact.

PROVISION OF HIGH QUALITY EDUCATION

Amongst the several social welfare

initiatives, the largest and most socially

encompassing is that of the holistic

development of Sitamarhi in Bhadohi district

of Uttar Pradesh, India. Punj Lloyd, through

its CSR Partner, Pt. Kanahya Lal Dayawanti

Punj Foundation, has almost exclusively

adopted three villages Baripur, Narepar and

Bankat around Sitamarhi. Apart from regular

programmes for social and community

development, there is specifi c focus on

education and healthcare in the village.

With a focus on rural education, Dayawanti

Punj Model School (DPMS) in Sitamarhi

stands out in terms of concept and

execution as a CSR project. Rather than

providing basic education to children from

local villages, this institution has aimed to

create a centre of excellence with top level

facilities that could develop a future leader

in every child that gets educated here. In a

small way, through this initiative, Punj Lloyd

is attempting to create a model for rural

education that can be extended to other

parts of India.

In FY2014, the school continued to excel

in scholastic and co-curricular activities.

On the academic front, all students of

class X passed with fi rst division, while for

class XII, 92% passed with a fi rst division.

On extra-curricular activities, the students

secured a host of awards. Some of the

highlights include:

National Science Talent Search

Examination – 20 students had

participated in the NSTSE. A student of

DPMS bagged Gold Medal and ranked

second at the State level

All India “Dr. Radha Krishnan” General

Knowledge competition – 10 students

participated in the competition

DPMS SCHOOL TEACHERS

39Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014

DPMS PRINCIPAL ACKNOWLEDGING AN ATHLETE FROM THE SCHOOL

DPMS STUDENTS AWARDED AT CBSE CLUSTER IV ATHLETICS CHAMPIONSHIP 2013

organised by Shivaji Foundation

Society, Jaipur. A student of Class X got

Shivaji Meritorious Bronze Medal

Two students of Class X won

the 1st prize in National Young

Environmentalists Conference-2013

organised by the National Bal Bhavan,

New Delhi

Twenty fi ve students had participated

in General Knowledge Unifi ed Cyber

Olympiad organised by Unifi ed Council

Hyderabad. Nishu Soni of Class VII

qualifi ed for the second round with an

All India Ranking of 265

In the Smart Kid Olympiads organised

by Silver Zone, New Delhi, the students

of the school secured several top

positions in varied subjects like General

Knowledge, Hindi, Informatics, English,

Mathematics and Science and won

a total of 49 gold medals, 35 silver

medals and 31 bronze medals

SPORTS

The students displayed their sporting

spirit by winning a Bronze medal for

the Under 19 category in CBSE 4th

Cluster Kho Kho Tournament 2013

organised by the Awadh International

School Faizabad, UP. 32 schools had

participated in the competition

In various state level Taekwondo

championships, the students of the

school excelled and secured several

gold, silver and bronze medals

Other accomplishments include:

The students of Dayawanti Punj Model

School successfully published the 1st

ever tabloid by the name of ‘Teen Spirit’

95 students received counselling

focusing on issues such as career

exploration, career change, personal

career development and other career

related issues

Many students aspiring to become

pilots in their careers were introduced

to an Aero-modelling course

‘Nitya Karma’ was introduced to

inculcate spiritual values in the children

SKILL DEVELOPMENT

In FY2014 Punj Lloyd expanded its CSR

Training focus to promote the concept of

‘Productivity’ across the construction

industry workforce.

The construction industry, especially in

developing countries like India, has always

had to overcome the challenge of securing

skilled manpower. In order to overcome

this, Punj Lloyd had set-up the Craftsmen

Training Institute (CTI) in Banmore, Madhya

Pradesh in 2009. This not-for-profi t venture

has since been providing training to

100-150 people per year in the civil and

mechanical functions.

While providing employment generating

training is very important, in the light of

stiff global competition and the need

to implement projects under strict cost

controls, there is a growing need for

construction companies in India to adopt

40

AN ONGOING TRAINING AT CTI 18 MECHANICAL TRAINEES GRADUATED FROM CTI IN FEBRUARY, 2014

CTI: FULFILLING THE REQUIREMENT OF SKILLED CRAFTSMEN IN THE INDUSTRY

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provided. On the other hand, work is on

to set-up a productivity measurement the

framework at each site to measure impact

of training related to productivity. The

plan is to extend training to a minimum of

1,000 supervisors and workers who will

be deployed at various Punj Lloyd sites.

Such a framework will be a ‘fi rst of its

kind’ and the development process is very

challenging.

With this initiative, Punj Lloyd has a

taken a leadership role in promoting

productivity improvement in project

execution across the construction industry

in India.

and promote a culture of continuous

productivity improvement. Unfortunately

today, there is no concept of training on

productivity improvement in the industry.

Even tools for measuring productivity

through well-defi ned parameters are

absent. Add to this the non-availability of

trainers who have a deep understanding of

the subject.

In this backdrop, in FY2014 Punj Lloyd

took another pioneering step to fi ll this

void by adopting a CSR mandate of skill

enhancement - providing productivity

training to supervisors mobilised for various

projects domestic and international. While

this initiative will improve performance on

Punj Lloyd’s sites to begin with, it will have

a much wider impact on the construction

industry in India by setting standards

and methods of promoting productivity

improvement across infrastructure

development projects in the country.

In FY2014, Punj Lloyd succeeded in

taking the initial steps to fulfi ll this broad and

wide objective.

First, it established a partnership with the

Australian Vocational Training and Education

Group to leverage Australian Government

supported Technical and Further Education

(TAFE) curriculum. This has helped leverage

subject-specifi c teaching material that is

well-known in the industry. Second, it has

carefully recruited 8 trainers with over 15

years of experience each, to go through

an intense ‘train the trainer’ curriculum

in Civil and Mechanical trades. Third, it

developed productivity training focused

around planning, task management, team

work and safety, with an emphasis on

practical hands on experience. In FY2014,

training was provided to 140 supervisors in

mechanical and civil trades and who were

then deployed at the Jamnagar Refi nery

project.

This intervention is expected to gather

steam in FY2015 with focus on two critical

areas. On one hand, the efforts will be

aimed at increasing the reach of training

41Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014

DIRECTORS’ REPORT42

DIRECTORS’ REPORT

Your Directors are pleased to present the Twenty Sixth Annual Report and the audited accounts for the fi nancial year ended March 31, 2014:

FINANCIAL HIGHLIGHTS

The fi nancial performance of the Company, for the year ended March 31, 2014 is summarized below: (Rs. Crores)

Particulars 2013-14 2012-13

Total Revenue 8,511.09 8,592.99

Earnings Before Interest, Tax, Depreciation & Amortisation (EBIDTA) 1,027.92 937.54

Less: Finance Cost 771.15 679.53

Profi t Before Tax, Depreciation & Amortisation 256.77 258.01

Less: Depreciation and Amortisation Expenses 244.76 227.88

Profi t Before Tax (PBT) 12.01 30.13

Less: Tax expenses (net of deferred tax effect and Minimum Alternate Tax credit) 4.20 10.51

Profi t After Taxation (PAT) 7.81 19.62

Add: Profi t Brought Forward 954.52 934.90

Surplus Available for appropriation 962.33 954.52

Profi t carried to Balance Sheet 962.33 954.52

BUSINESS REVIEW

The Management Discussion and Analysis Section of the Annual Report presents a detailed business review of the Company.

SUBSIDIARY COMPANIES

During the year, 3 new subsidiaries / step down subsidiaries were added; these are PL Surya Urja Limited, India, Punj Lloyd Aviation Pte. Limited and Reliance Contractors Private Limited, Singapore.

PT Contech Bulan, Sembawang Australia Pty Limited, Sembawang Tianjin Pte Limited, Sembawang Tianjin Heping Pte Limited, Sembawang Group Pte Limited and Christos Trading Limited ceased to be subsidiaries of the Company.

In accordance with the General Circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profi t and Loss and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who is interested in obtaining the same.

DIVIDEND

To conserve the cash resources, your Directors have not recommended any dividend on the equity shares for the fi nancial year ended March 31, 2014.

OPERATIONS REVIEW

While the focus has been on execution, slowdown in progress of projects due to external factors and the fi nancial squeeze faced by construction companies, had an adverse impact on project work and revenues were affected. In this backdrop, the Company did take a more cautious approach in bidding for new projects, and the order backlog as on May 20, 2014 was Rs. 20,222 crore.

The Company achieved total revenues of Rs. 8,511 Crores in FY 2013-14 in comparison to Rs. 8,593 Crores in FY 2012-13. Earnings Before Interest, Tax, Depreciation and Amortisation (EBIDTA) increased by 9.6% to Rs. 1,028 Crores in FY 2013-14 in comparison to previous year. Finance costs rose to Rs. 771 Crores in comparison to Rs. 680 Crores in previous year. Profi t Before Tax (PBT) stood at Rs. 12 Crores as against Rs. 30 Crores in previous year. Profi t After Tax (PAT) reduced to Rs. 8 Crores in FY 2013-14 from Rs. 20 Crores in previous year.

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201443

The Annual Accounts of the subsidiary companies are available for inspection at the Registered Offi ce of the Company and that of respective subsidiary companies between 11.00 a.m. to 1.00 p.m. on all working days. The Consolidated Financial Statements presented by the Company include fi nancial results of its subsidiary companies.

A statement in respect of each of the subsidiaries, giving the details of capital, reserves, total assets and liabilities, details of investment, turnover, profi t before taxation, provision for taxation, profi t after taxation and proposed dividend, if any, is attached to this report.

HEALTH, SAFETY AND ENVIRONMENT (HSE)

The Company has internalized HSE into day to day operations across all sites. The Company is committed to adopting the best in class HSE practices. The Company has certifi cation for three management systems: OHSAS 18001:2007 - Occupational Health & Safety Management System, ISO 14001:2004 - Environment Management System and ISO: 9001-2008 - Quality Management System. Assurance for on ground practice and veracity of these standards is provided by periodic audits at projects conducted by a third party agency - Det Norske Veritas. These audits are also undertaken at the corporate level. A detailed note on the HSE practices and initiatives by the Company is included in Management Discussion and Analysis Section of the Annual Report.

DIRECTORS

Mr Luv Chhabra retires by rotation, and being eligible, offers himself for reappointment at the ensuing Annual General Meeting (“the AGM”). The Board of Directors recommends his appointment. In terms of the provisions of the Companies Act 2013, Dr. Naresh Kumar Trehan, Mr. Phiroz Adi Vandrevala, Ms. Ekaterina Alexandra Sharashidze and Mr. Maniedath Madhavan Nambiar, are retiring by rotation at the AGM and are proposed to be appointed as Independent Directors of the Company at the AGM for a period of fi ve years with effect from the date of the AGM. Appropriate resolutions seeking your approval for the appointment of above persons as Independent Directors of the Company, forms part of the notice calling the AGM.

Mr. Puthucode Narayanswami Krishnan, was appointed as an Additional Director of the Company w.e.f. November 01, 2013. Mr. Krishnan will hold the offi ce upto the date of the ensuing AGM. Appropriate resolution seeking your approval for the appointment of Mr. Krishnan as a Director of the Company, liable to retire by rotation, forms part of the notice calling the AGM.

Mr. Krishnan was also appointed as “Director – Finance” by the Board of Directors of the Company for a period of fi ve years with effect from November 1, 2013 and he was redesignated as “Director Finance & Chief Financial Offi cer” by the Board of Directors in its meeting held on May 20, 2014. Appropriate resolution seeking your approval for the above appointment and payment of remuneration to him forms part of the notice calling the AGM.

Mr. Jayarama Prasad Chalasani, was appointed as an Additional Director of the Company w.e.f. January 31, 2014. Mr. Chalasani will hold the offi ce upto the date of the ensuing AGM. Appropriate resolution seeking your approval for the appointment of Mr. Chalasani as a Director of the Company, liable to retire by rotation, forms part of the notice calling the AGM.

Mr. Chalasani was also appointed as “Director & Group CEO” by the Board of Directors of the Company for a period of fi ve years with effect from January 31, 2014 and he was redesignated as “Managing Director and Group CEO” by the Board of Directors in its meeting held on May 20, 2014. Appropriate resolution seeking your approval for the above appointment and payment of remuneration to him forms part of the notice calling the AGM.

During the year, Mr Sanjay Gopal Bhatnagar and Mr. P K Gupta, ceased to be directors of the Company w.e.f. August 02, 2013 and December 31, 2013 respectively.

Brief resume of the Directors seeking appointment / re-appointment at the AGM, as required under Clause 49 of the Listing Agreement and Companies Act 2013, forms part of the Notice convening the AGM.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217(2AA) of the Companies Act, 1956, it is hereby confi rmed:

1. that in the preparation of the annual accounts, the applicable accounting standards have been followed;

2. that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year and of the profi t or loss of the Company for the period under review;

3. that the Directors have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. that the Directors have prepared the annual accounts of the Company on a ‘going concern’ basis.

EMPLOYEE STOCK OPTION SCHEME

The details as required to be provided in terms of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as amended from time to time with regards to the Employee Stock Option Plan 2005 and Employee Stock Option Plan 2006 of the Company as on March 31, 2014 are given below.

DIRECTORS’ REPORT44

Sl. No.

Particulars ESOP 2005 ESOP 2006

Nov. 17, 2005 May 10, 2006 Oct. 30, 2006 Sept. 27, 2007 May 30, 2008 March 30, 2009 January 22, 2010 August 03, 2010

1 Total No. of options granted

3,217,445 771,040 1,491,050 30,000 40,000 30,000 30,000 30,000

2 Pricing Formula Exercise price being at 10%

discount to IPO price i.e. Rs. 630/-

per share of Rs. 10 each. After split

in face value of share from Rs. 10 to Rs. 2 per share, the exercise price adjusted to Rs. 126/- per share

Rs. 235.99 (being the

market price as defi ned in SEBI

guidelines)

Rs. 154.46 (being the

market price as defi ned in SEBI

guidelines)

Rs. 299.90 (being the

market price as defi ned in SEBI

guidelines)

Rs. 310.35 (being the

market price as defi ned in SEBI

guidelines)

Rs. 90.40 (being the market price

as defi ned in SEBI guidelines)

Rs. 198.90 (being the

market price as defi ned in SEBI

guidelines)

Rs. 132.45 (being the

market price as defi ned in SEBI

guidelines)

3 Number of options vested

3,217,445 771,040 1,491,050 9,000 6,000 9,000 Nil 9,000

4 Number of options exercised

1,017,108 10,132 214,135 Nil Nil 3,000 Nil Nil

5 Total no. of shares arising as a result of exercise of options

1,017,108 10,132 214,135 Nil Nil 3,000 Nil Nil

6 Number of options lapsed

2,200,337 760,908 1,276,915 30,000 40,000 27,000 30,000 30,000

7 Number of options forfeited

Nil Nil Nil Nil Nil Nil Nil Nil

8 Variation in terms of options

None None The remuneration committee had in its meeting held on March 30,

2009 revised the period of exercise of stock options from 18 months to three years.

The remuneration committee had in its meeting held on March 30,

2009 revised the period of exercise of stock options from 18 months to three years.

The remuneration committee had in its meeting held on March 30,

2009 revised the period of exercise of stock options from 18 months to three years.

None None None

9 Money realized by exercise of options (Rs.'000)

128,156 2,391 33,075 Nil Nil 271 Nil Nil

10 Total No. of options in force as on 31st March, 2014

NIL NIL NIL Nil Nil NIL Nil Nil

11 Grant to Senior Management

-Number of options 1,850,545 352,935 1,002,800 30,000 40,000 30,000 30,000 30,000

-Vesting period 4 Yrs 4 Yrs 4 Yrs 4 Yrs 4 Yrs 4 Yrs 4 Yrs 4 Yrs

12 Any other employee who receives a grant in any one year of options amounting to 5% or more of options granted during that year

Mr. V. K. Kaushik*,

Options granted - 200,000

Mr. Pradeep** Kulshrestha,

Options granted - 40,000

Mr. V. K. Kaushik*,

Options granted - 75,000

Mr. Paul Birch***, Options Granted

- 30,000

Ms. Pratima Ram****, Options

Granted - 20,000

Mr. Aditya Vij*****, Options

Granted - 30,000

Mr. Atul Pasricha******,

Options Granted - 30,000

Mr. S.S.Raju,*******

Options Granted - 30,000

13 Identifi ed employees who were granted option, during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant.

Nil Nil Nil Nil Nil Nil Nil Nil

* Ceased to be in employment w.e.f. 16.12.2009. ** Ceased to be in employment w.e.f. 15.04.2010 ***Ceased to be in employment w.e.f 31.08.2010

**** Ceased to be in employment w.e.f 31.08.2010 ***** Ceased to be in employment w.e.f 31.05.2011 ******Ceased to be in employment w.e.f 30.04.2010

*******Ceased to be in employment w.e.f 12.09.2012

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201445

CORPORATE GOVERNANCE

As stipulated under Clause 49 of the Listing Agreements executed with the Stock Exchanges, the Report on Corporate Governance is annexed to this report and forms part of the Annual Report.

The requisite Certifi cate from the Auditors of the Company confi rming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49 is attached to this report.

CORPORATE SOCIAL RESPONSIBILITY

During the year, your directors have constituted the Corporate Social Responsibility Committee (CSR Committee) comprising Mr. Atul Punj - Chairman and Mr Luv Chhabra and Mr. M Madhavan Nambiar as other members.

The said Committee has been entrusted with the responsibility of formulating and recommending to the Board, a Corporate Social Responsibility Policy (CSR Policy) and deciding the activities to be undertaken by the Company..

MANAGEMENT DISCUSSION AND ANALYSIS

As stipulated under Clause 49 of the Listing Agreements executed with the Stock Exchanges, Management Discussion and Analysis Report, for the year under review, is presented in a separate section forming part of the Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard (AS-21), Consolidated Financial Statements are attached and form part of the Annual Report.

AUDITORS AND AUDITORS’ REPORT

M/s Walker Chandiok & Co LLP, Chartered Accountants, Statutory Auditors of the Company, hold offi ce until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. In terms of Section 139 of the Companies Act, 2013, they can be appointed for a remaining term of three years starting from the conclusion of the ensuing Annual General Meeting until the conclusion of the Fourth consecutive Annual General Meeting of the Company (subject to ratifi cation of their appointment at each Annual General Meeting).

The Company has received letter from the statutory auditors to the effect that their reappointment, if made, would be within the prescribed limits under Section 139 of the Companies Act, 2013 and that they are not disqualifi ed for reappointment. The observations of the Auditors have been fully explained in Notes 10, 13 and 14 in Annexure 1 to the Abridged Financial Statements and also Notes 36, 41 and 42 to the complete set of Financial Statements.

INTERNAL CONTROL SYSTEM

The Group Internal Audit Division along with outsourced audit partner KPMG, continuously monitors the effectiveness of the internal controls with an objective to provide to the Audit Committee, an independent, objective and reasonable assurance on the adequacy and effectiveness of the organisation’s risk management, control and governance process. Group Internal Audit Division develops an audit plan / schedule based on the risk profi le of business activities are prioritised for audit accordingly.

The Audit Division also assesses opportunities for improvements in business processes, systems and controls; provides recommendation designed to add value to the organisation and follows up on the implementation of corrective actions.

The scope and authority of the Group Audit Division is derived from the Audit Committee. The audits are scheduled in a manner that audit plan is focussed on following objectives:• All operational and related activities are performed efficiently and effectively• Checking and verifying the key financial and operational controls• Significant financial, managerial and operating information that is

relevant, accurate and reliable is provided on time• Employees actions are in accordance with the company’s policies and

procedures, applicable laws and regulation• Significant legislative and regulatory provisions impacting the

organisation are recognised and addressed appropriately

The internal audit function works closely with the outsourced partner to develop internal fi nancial & operational control framework and provide independent and objective assurance to the Audit committee and the Executive Management on the system of internal controls deployed in the group and provides a systematic, disciplined approach to evaluating and improving the effectiveness of risk management, control and governance procedures.

FIXED DEPOSITS

The Company has not accepted any fi xed deposits from public, shareholders or employees during the year.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees), Rules, 1975, as amended, the names and other particulars of employees are set out in the annexure to the Directors’ Report.

(However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Report excluding the aforesaid information is being sent to all the members of the Company. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Offi ce of the Company.)

CONSUMPTION OF ENERGY AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The details as required under the Companies (Disclosure of Particulars in Report of Board of Directors) Rules, 1988 are given as an annexure to the Directors’ Report.

(However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Report excluding the aforesaid information is being sent to all the members of the Company. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Offi ce of the Company.)

ACKNOWLEDGEMENT

Your directors recognise and appreciate the efforts of all employees of the Company. Your directors would like to express their sincere appreciation for the continued co-operation and support received from shareholders, debenture holders, debenture trustee, bankers, fi nancial institutions, regulatory bodies and other business constituents.

For and on Behalf of the Board of Directors

Atul PunjChairman

Place: GurgaonDate: May 20, 2014

CORPORATE GOVERNANCE REPORT46

CORPORATE GOVERNANCE REPORT

COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE

Your Company’s corporate governance philosophy is founded on the principles of fair and transparent business practices. The governance structures are created to protect the interests of and generate long term sustainable value for all stakeholders – customers, employees, partners, investors and the community at large. The business is governed and supervised by a strong Board of Directors and together with the management they are committed to uphold the principles of excellence across all activities. The Company is compliant with the latest provisions of Clause 49 of the Listing Agreement, as amended from time to time.

DATE OF REPORT

The information provided in the Report on Corporate Governance for the purpose of uniformity is as on March 31, 2014. The Report is updated as on the date of the report wherever applicable.

BOARD OF DIRECTORS

COMPOSITION OF THE BOARD

As at March 31, 2014, the Board consists of 8 Directors, half of which are Independent Directors. The Executive Chairman of the Board of Directors is a Promoter Director. The composition of the Board satisfi es the conditions of the Listing Agreement executed with the Stock Exchanges.

Table 1: Composition of the Board of Directors as on March 31, 2014

Name of the Director Category

Mr. Atul Punj Promoter, Executive

Mr. J P Chalasani Executive

Mr. Luv Chhabra Executive

Mr. P N Krishnan Executive

Dr. Naresh Kumar Trehan Independent

Mr. Phiroz Vandrevala Independent

Ms. Ekaterina Sharashidze Independent

Mr. M Madhavan Nambiar Independent

There are no inter-se relationships amongst the board members.

BOARD MEETINGS

During the year, the Board of the Company met 4 times on May 10, 2013, August 02, 2013, November 01, 2013 and February 14, 2014. The maximum gap between any two Board meetings was less than four months. Meetings are usually held at Corporate offi ce I, at 78 Institutional Area, Sector 32 Gurgaon 122001, India.

The agenda papers and detailed notes are circulated to the Board well in advance of every meeting, where it is not practicable to attach any document to the agenda, then same is placed before the Board at the meeting and in special circumstances, additional items on the agenda are taken up at the meeting. In case of business exigencies or urgency of matters, resolutions

are passed by circulation and same is placed before the Board in the next meeting.

Video conferencing facilities are used, as and when required, to facilitate directors to participate in the meetings.

The Board is given presentation on the operations of the Company covering all business areas of the Company, inter alia marketing, sales, health safety environment, fi nance, internal audit, litigations, risk management, major business segments, business environment, business opportunities and overview of all divisions and departments, including performance of the business operations of major subsidiary companies, before taking on record the quarterly / annual fi nancial results of the Company.

INFORMATION SUPPLIED TO THE BOARD

Among others, information supplied to the Board includes:

• Annual operating plans and budgets and any update thereof• Capital budgets and any updates thereof• Quarterly results for the Company and operating divisions and business

segments• Minutes of the meetings of the Audit Committee and other Committees

of the Board• Information on recruitment and remuneration of senior offi cers just

below the level of the Board, including the appointment or removal of Chief Financial Offi cer and Company Secretary

• Materially important show cause, demand, prosecution and penalty notices

• Fatal or serious accidents, dangerous occurrences, any material effl uent or pollution problems

• Any material default in fi nancial obligations to and by the Company, or substantial non-payment for goods sold by the Company

• Any issue, which involves possible public or product liability claims of substantial nature, including any judgement or order which, may have passed strictures on the conduct of the Company or taken an adverse view regarding another enterprise that can have negative implications on the Company

• Certifi cate by the respective Heads of Departments/Projects regarding compliance with the statutory laws

• Details of any joint venture or collaboration agreement• Transactions that involve substantial payment towards goodwill, brand

equity or intellectual property• Signifi cant labour problems and their proposed solutions. Any signifi cant

development in human resources / industrial relations front like signing of wage agreement, implementation of voluntary retirement scheme, etc.

• Sale of material nature of investments, subsidiaries, assets, which is not in the normal course of business

• Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movement, if material

• Non-compliance of any regulatory, statutory nature or listing requirements and shareholders service such as non-payment of dividend, delay in share transfer, etc.

• General notices of interest of Directors • Minutes of the Board meetings of unlisted subsidiary companies

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201447

DIRECTORS’ ATTENDANCE RECORD AND DIRECTORSHIPSTable 2: Attendance of Directors at Board Meetings during the year, last Annual General Meeting and details of other Directorship

and Chairmanship /Membership of Committees of each Director :

Name of the DirectorNo. of other

Directorships1

No. of Board level Committee memberships / Chairmanships in other Indian public companies

Attendance Particulars3

Member2 Chairman2

No. of Board Meetings

Attendance at last AGM

Held Attended Attended

Mr. Atul Punj 9 2 5 4 4 Yes

Mr. J P Chalasani (Since January 31, 2014) 2 1 0 1 1 N.A.

Mr. Luv Chhabra 7 3 1 4 4 Yes

Mr. P N Krishnan (Since November 1, 2013) 0 0 0 1 1 N.A.

Dr. Naresh Kumar Trehan 1 0 0 4 4 Yes

Mr. Phiroz Vandrevala 2 0 0 4 4 No

Ms. Ekaterina Sharashidze 0 0 0 4 1 No

Mr. M Madhavan Nambiar (Since June 10, 2013) 5 3 0 3 3 No

Mr. Sanjay Gopal Bhatnagar (Upto August 2, 2013) N.A. N.A. N.A. 1 1 No

Mr. Pawan Kumar Gupta (Upto December 31, 2013) N.A. N.A. N.A. 3 3 Yes

Notes:1. The Directorships held by Directors as mentioned above do not include Punj Lloyd Limited, alternate directorships and directorships in foreign companies,

companies registered under Section 25 of the Companies Act, 1956 and private limited companies.2. In accordance with Clause 49 of the Listing Agreement, Memberships / Chairmanships of only the Audit Committees and Stakeholders Relationship

Committee / Shareholders’/ Investors’ Grievance Committees of all public limited companies (excluding Punj Lloyd Limited) have been considered.3. Includes Attendance, if any, through Video Conferencing facilities, provided to the directors to facilitate participation in the meetings.

BOARD INDEPENDENCE

In compliance with Clause 49 of the Listing Agreement with the stock exchanges, half of the Board of Directors of the Company, i.e. 4 out of 8, comprises of Independent Directors. An Independent Director means a person who is not an offi cer or employee of the Company or its subsidiaries or any other individual having a material pecuniary relationship or transactions with the Company which, in the opinion of our Board of Directors, would interfere with the exercise of independent judgement in carrying out the responsibilities of a Director. The Company does not have any pecuniary relationship with any non-executive or independent director except for payment of commission, sitting fee and reimbursement of travelling expenses for attending the Board meetings. No sitting fee is paid for attending the meetings of any Committee.

The details of all remuneration paid or payable to the Directors are given in Table 3A.

Table 3A: Remuneration paid or payable to Directors for the year ended March 31, 2014

Name of the Director Salary Sitting Fees PerquisitesPerformance

Incentive

Deferred Benefi ts

(PF & Superannuation)

Commission Total

Mr. Atul Punj - - 68,75,123 - - - 68,75,123

Mr. J P Chalasani (Since January 31, 2014)

46,84,711 - 5,700 - 6,24,072 - 53,14,483

Mr. Luv Chhabra 1,13,29,707 - - - 25,64,933 - 1,38,94,640

Mr. P N Krishnan (Since November 1, 2013)

89,98,475 - - - 4,17,255 - 94,15,730

Dr. Naresh Kumar Trehan - 40,000 - - - - 40,000

CORPORATE GOVERNANCE REPORT48

Name of the Director Salary Sitting Fees PerquisitesPerformance

Incentive

Deferred Benefi ts

(PF & Superannuation)

Commission Total

Mr. Phiroz Vandrevala - 40,000 - - - - 40,000

Ms. Ekaterina Sharashidze - 10,000 - - - - 10,000

Mr M Madhavan Nambiar - 30,000 - - - - 30,000

Mr. Pawan Kumar Gupta(Upto December 31, 2013)

1,67,70,263 - - - 10,80,000 - 1,78,50,263

Mr. Sanjay Gopal Bhatnagar(Upto August 2, 2013)

- 10,000 - - - - 10,000

The details of Current Service Tenure, Notice period and Severance Fees of Executive Directors are given in Table 3B.

Table 3B: Details of Current Service Tenure, Notice period and Severance Fees of Executive Directors:

Name of the Director Current Tenure and last re-appointment date Notice Period / Severance Fees

Mr. Atul Punj 5 years; July 1, 2013 3 Months Notice or Basic Salary in lieu thereof.

Mr. J P Chalasani 5 years; January 31, 2014 -do-

Mr. Luv Chhabra 5 years; July 1, 2011 -do-

Mr. P N Krishnan 5 years; November 01, 2013 -do-

The details of Stock option to Directors are given in Table 4.

Table 4: Details of Stock Option to Directors as on March 31, 2014

Name of the DirectorTotal No. of

Options

Options vested till 31 March

2014

Options Exercised till 31

March 2014

Exercise Price per share (Rs.)

Options still unvested

ESOP 2005

Mr. Luv Chhabra 135,000 135,000 81,000 126.00 Nil

ESOP 2006

Mr. Luv Chhabra 60,000 60,000 18,000 154.46 Nil

Note: Each option gives the holder a right to one equity share of the Company. All the vested options under ESOP 2005 and ESOP 2006 other than options exercised stand lapsed as on March 31, 2014.

SHARES AND CONVERTIBLE INSTRUMENTS HELD BY NON-EXECUTIVE DIRECTORS

Details of the shares of the Company held by Non-Executive Directors are given in Table 5.

Table 5: Details of Shares held by Non-Executive Directors as on March 31, 2014

Name of the Director No. of Shares Held (face value of Rs. 2/- each)

Dr. Naresh Kumar Trehan* 4,000

Mr. Phiroz Vandrevala 5,000

Ms. Ekaterina Sharashidze -

Mr. M Madhavan Nambiar -

*Held jointly with othersAs on March 31, 2014, none of the Non-Executive Directors held any convertible instruments of the Company.

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201449

COMMITTEES OF THE BOARD

AUDIT COMMITTEE

The particulars of Composition, Meetings and Attendance records of the Audit Committee are given in Table 6.

Table 6: Particulars of Composition, Meetings and Attendance records of Audit Committee

Name of the Members Status CategoryNo. of meetings

attendedDates on which Meetings

held

Dr. Naresh Kumar Trehan Chairman Independent 4 out of 4 10th May, 2013

2nd August, 2013

1st November, 2013

14th February, 2014

Mr. Phiroz Vandrevala Member Independent 4 out of 4

Ms. Ekaterina Sharashidze Member Independent 1 out of 4

Mr. Sanjay Gopal Bhatnagar (Upto August 2, 2013) N.A. N.A. 1 out of 1

The Audit Committee assists the Board in its responsibility for overseeing the quality and integrity of the accounting, auditing and reporting practices of the Company and its compliance with the legal and regulatory requirements. All members of the Audit Committee have accounting and fi nancial expertise.

The Director Finance & Chief Financial Offi cer and representatives of the statutory auditors and internal auditors are regularly invited by the Audit Committee to its meetings. Mr. Dinesh Thairani, Company Secretary, is the secretary to the Committee.

The constitution of the Audit Committee meets the requirements of Section 292A of the Companies Act, 1956, read with relevant provisions of the Companies Act 2013 as well as that of the Listing Agreements.

The functions of the Audit Committee of the Company include the following:

Pursuant to the provisions of the Companies Act, 2013 and the rules made thereunder, and Clause 49 of the Listing Agreement, the terms of reference, roles and responsibilities of the Committee were restated :-

Oversight of the company’s fi nancial reporting process and the disclosure of its fi nancial information to ensure that the fi nancial statement is correct, suffi cient and credible; Recommendation for appointment, remuneration and terms of appointment of auditors of the company; Approval of payment to statutory auditors for any other services rendered by the statutory auditors; Reviewing / Examining, with the management, the annual fi nancial statements and auditor’s report thereon before submission to the board for approval, with particular reference to: a. Matters required to be included in the Director’s Responsibility Statement

to be included in the Board’s report in terms of clause (c) of sub-section 3 of section 134 of the Companies Act, 2013

b. Changes, if any, in accounting policies and practices and reasons for the same c. Major accounting entries involving estimates based on the exercise of

judgment by management d. Signifi cant adjustments made in the fi nancial statements arising out of

audit fi ndings e. Compliance with listing and other legal requirements relating to fi nancial

statements f. Disclosure of any related party transactions g. Qualifi cations in the draft audit report Reviewing, with the management, Annual / Quarterly fi nancial statements before submission to the board for approval; Monitoring /Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue,

etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter; Review and monitor the auditor’s independence and performance, and effectiveness of audit process; Approval or any subsequent modifi cation of transactions of the company with related parties; Scrutiny of inter-corporate loans and investments;Valuation of undertakings or assets of the company, wherever it is necessary;Evaluation of internal fi nancial controls and risk management systems;Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffi ng and seniority of the offi cial heading the department, reporting structure coverage and frequency of internal audit;Discussion with internal auditors of any signifi cant fi ndings and follow up there on ;Reviewing the fi ndings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board;Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;To review the functioning of the Whistle Blower mechanism; Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the fi nance function or discharging that function) after assessing the qualifi cations, experience and background, etc. of the candidate;Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

The Committee shall have such powers and rights as are prescribed under the provisions of the Listing Agreement and the Companies Act, 2013 and the rules made thereunder, as notifi ed or may be notifi ed from time to time.

The Company has systems and procedures in place to ensure that the Audit Committee mandatorily reviews :

Management discussion and analysis of fi nancial condition and results of operations.Statement of signifi cant related party transactions (as defi ned by the Audit Committee) submitted by management.

CORPORATE GOVERNANCE REPORT50

Management letters/letters of internal control weaknesses issued by the statutory auditors.Internal audit reports relating to internal control weaknesses.The appointment, removal and terms of remuneration of the chief internal auditor.

In addition, the Audit Committee of the Company is also empowered to review the fi nancial statements, in particular, the investments made by the unlisted subsidiary companies.

The Audit Committee is also apprised on information with regard to related party transactions by being presented:

A statement in summary form of transactions with related parties in ordinary course of business.Details of material individual transactions with related parties which are not in the normal course of business.Details of material individual transactions with related parties or others, which are not on an arm’s length basis along with management’s justifi cation for the same.

NOMINATION AND REMUNERATION COMMITTEE

In accordance with the provisions of the Companies Act, 2013 and the rules made thereunder (‘the Act’) and the Listing Agreement, the Remuneration Committee is renamed as Nomination and Remuneration Committee.

The matters referred to the Committee are:

To formulate the criteria for determining qualifi cations, positive attributes and independence of a director and recommend to the Board a policy, in accordance with the requirements of the Act, relating to the remuneration for the directors, key managerial personnel and other employees.

To identify persons who are qualifi ed to become directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal.

To carry out evaluation of every director’s performance.

To consider and recommend to the Board, the remuneration to be paid by the Company to Executive Directors / Whole time Directors of the Company, keeping in view the provisions of Listing Agreement with Stock Exchanges;

To perform such other functions as have been referred / may be referred by the Board or required in accordance with the Act, Listing Agreements or SEBI Regulations as amended from time to time.

The particulars of Composition and Attendance records of the Nomination and Remuneration Committee are given in Table 7.

Table 7: PARTICULARS OF COMPOSITION AND ATTENDANCE RECORDS OF NOMINATION AND REMUNERATION COMMITTEE

Name of the Members Status CategoryNo. of Meetings

Held Attended

Dr. Naresh Kumar Trehan Chairman Independent 4 4

Mr. Phiroz Vandrevala Member Independent 4 4

Ms. Ekaterina Sharashidze Member Independent 4 1

Mr. Sanjay Gopal Bhatnagar (Upto August 2, 2013) N.A. N.A. 1 1

The Committee met 4 times during the year: on May 10, 2013, August 2, 2013, November 1, 2013, and February 14, 2014. Minutes of the proceedings of the Committee meetings are placed before the Board meeting for perusal and noting.

STAKEHOLDERS’ RELATIONSHIP COMMITTEE CUM SHAREHOLDERS’ / INVESTORS’ GRIEVANCE COMMITTEEPursuant to provisions of the Companies Act, 2013 and the rules made thereunder (‘the Act’), the Shareholders / Investors Grievance Committee is re-named as Stakeholders’ Relationship Committee cum Shareholders’ / Investors’ Grievance Committee.

The Committee is empowered pursuant to its terms of reference to :-Consider and resolve the grievances of security holders of the Company. -Specifi cally look into the redressal of shareholder(s) and investors complaints like transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends etc.-Perform such other functions as have been referred / may be referred by the Board or required in accordance with the Act, Listing Agreements or SEBI Regulations as amended from time to time.

The Committee met 2 times during the year: on August 02, 2013 and February 14, 2014. The particulars of Composition and Attendance Records of the Committee are detailed in Table 8.

Table 8: Particulars of Composition and Attendance records of Stakeholders’ Relationship Committee cum Shareholders’ / Investors’ Grievance Committee

Name of the Members Status CategoryNo. of Meetings

Held Attended

Dr. Naresh Kumar Trehan Independent Chairman 2 2

Mr. Atul Punj Promoter, Executive Member 2 2

Mr. Luv Chhabra Executive Member 2 2

During the year 2013-14, the Company received a total of 35 queries/complaints from various shareholders relating to non-receipt of dividend, annual report, and share certifi cates etc. The same were attended to the satisfaction of the shareholders. At the end of the year on March 31, 2014, no complaint was pending. Mr. Dinesh Thairani is the Compliance Offi cer of the Company.

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201451

CEO / CFO CERTIFICATION

The CEO and the Director-Finance have certifi ed, in terms of clause 49 of the Listing Agreement, to the Board that the fi nancial statements present a true and fair view of the Company’s affairs and are in compliance with existing accounting standards.

CODE OF CONDUCT

The Board of Directors of the Company has adopted the Code of Conduct for Directors and Senior Management Personnel. The Code is applicable to Executive and Non-Executive Directors as well as Senior Management Personnel. A copy of the code is available on Company’s website www.punjlloyd.com

A declaration signed by the Managing Director & Group CEO is given below:

I hereby confi rm that:

The Company has obtained from all the members of the Board and Senior Management Personnel, an affi rmation that they have complied with the

Code of Conduct for Directors and Senior Management Personnel in respect of the fi nancial year 2013-14.

For Punj Lloyd Limited

J P Chalasani

Managing Director & Group CEO

SUBSIDIARY COMPANIES

Clause 49 defi nes a ‘material non-listed Indian subsidiary’ as an unlisted subsidiary, incorporated in India, whose turnover or net worth (i.e. paid up capital and free reserves) exceeds 20% of the consolidated turnover or net worth respectively, of the listed holding company and its subsidiaries in the immediately preceding accounting year.

The Company does not have any material non-listed Indian subsidiary company and hence, it is not required to have an Independent Director of the Company on the Board of any subsidiary company.

MANAGEMENT

MANAGEMENT DISCUSSION AND ANALYSIS

This annual report has a detailed section on Management Discussion and Analysis.

DISCLOSURES BY MANAGEMENT TO THE BOARD

All disclosures relating to fi nancial and commercial transactions where Directors may have a potential interest are provided to the Board and the interested Directors do not participate in the discussion nor do they vote on such matters.

DISCLOSURE OF ACCOUNTING TREATMENT IN PREPARATION OF FINANCIAL STATEMENTS

The Company has followed the guidelines on accounting standards laid down by the Institute of Chartered Accountants of India (ICAI) in preparation of its fi nancial statements.

CODE FOR PREVENTION OF INSIDER TRADING PRACTICES

The Company has instituted a comprehensive Code of Conduct for its Directors, management and staff, laying down the guidelines and procedures to be followed and disclosures to be made, while dealing with shares of the Company and cautioning them of the consequences of violations. The code clearly specifi es, among other matters, that Directors and specifi ed employees of the company can trade in the shares of the company only during ‘Trading Window Open Period’. The trading window is closed during the time of declaration of results, dividend and material events, as per the code.

Mr. Dinesh Thairani, Company Secretary, is the Compliance Offi cer of the Company.

SHAREHOLDERS

RE-APPOINTMENT OF DIRECTORS

The brief resumes and other requisite details, as required to be disclosed under Clause 49 of the Listing Agreement, of the Directors seeking appointment / re-appointment at the ensuing Annual General Meeting (“AGM”) are given as part of the Notice calling the ensuing AGM.

COMMUNICATION TO SHAREHOLDERS

The Company puts forth key information about the Company and its performance, including quarterly results, offi cial news releases and presentations to analysts, on its website regularly for the benefi t of the public at large.

CORPORATE GOVERNANCE REPORT52

The quarterly/half yearly and annual fi nancial results of the Company are normally published in Business Standard/Hindu Business Line/Financial Express in English and Rashtriya Sahara, Jansatta and Business Standard in Hindi. In addition to the above, quarterly and annual results are displayed at our website at ‘www.punjlloyd.com/investors’ for the information of all Shareholders.

Detailed presentation are made to Institutional investors and Financial Analysts on the unaudited quarterly fi nancial results as well as the annual audited fi nancial results of the Company. These presentations are also uploaded on our website. Annual Report containing, inter alia, Audited annual accounts, consolidated fi nancial statements, Directors’ Report, Auditors’ Report and other important information is circulated to members and others entitled therto.

SCORES

The Company has enrolled itself for SEBI Complaints Redress System (SCORES), a centralized web based complaints redress system with 24 x 7 access. It allows online lodging of complaints at anytime from anywhere. An automated email acknowledging the receipt of the complaint and allotting a unique complaint registration number is generated for future reference and tracking. The Company uploads an Action Taken Report (ATR) so that the investor can view the status of the complaint online. All complaints are saved in a central database which generates relevant MIS reports to SEBI.

INVESTOR GRIEVANCES & SHAREHOLDER REDRESSAL

The Company has appointed a Registrar and Share Transfer Agent, M/s. Karvy Computershare Pvt. Ltd., which is fully equipped to carry out share transfer activities and redress investor complaints. Mr. Dinesh Thairani, Company Secretary is the Compliance Offi cer for redressal of all shareholders’ grievances.

DETAILS OF NON-COMPLIANCE BY THE COMPANY

The Company has complied with all the requirements of regulatory authorities. No penalties / strictures were imposed on the Company by stock exchanges or SEBI or any statutory authority on any matter related to capital markets during the last three years.

COMPLIANCE

MANDATORY REQUIREMENTS

The Company is fully compliant with the applicable mandatory requirements of Clause 49.

A Certifi cate from M/s Walker Chandiok & Co LLP, Statutory Auditors, confi rming compliance with the conditions of the Corporate Governance as stipulated under Clause 49, is attached to the Directors’ report forming part of the Annual report.

NON- MANDATORY REQUIREMENTS

The details of compliance of the non-mandatory requirements are listed below.

NON EXECUTIVE CHAIRMAN’S OFFICE

The Company has an Executive Chairman and hence, this is not applicable.

REMUNERATION COMMITTEE

Details of the composition and function of the Remuneration Committee are given in the section ‘Committees of the Board’.

SHAREHOLDER RIGHTS - FURNISHING OF HALF-YEARLY RESULTS

Details of the shareholders’ rights in this regard are given in the section ‘Communication to Shareholders’.

AUDIT QUALIFICATIONS

The observations of the Auditors have been fully explained in Notes 10, 13 and 14 in Annexure 1 to the Abridged Financial Statements and also Notes 36, 41 and 42 to the complete set of Financial Statements.

The Company continues to adopt appropriate best practices in order to ensure unqualifi ed Financial Statements.

WHISTLE-BLOWER POLICY

The Company has in place a vigil mechanism in the form of Whistle Blower Policy. It aims at providing avenues for employees to raise complaints and to receive feedback on any action taken and seeks to reassure the employees that they will be protected against victimization and for any whistle blowing conducted by them in good faith. The policy is intended to encourage and enable the employees of the Company to raise serious concerns within the organization rather than overlooking a problem or handling it externally. The Company is committed to the highest possible standard of openness, probity and accountability. It contains safeguards to protect any person who uses the Vigil Mechanism (whistle blower) by raising any concern in good faith. The Company does not tolerate any form of victimization and take appropriate steps to protect a whistleblower that raises a concern in good faith and treats any retaliation as a serious disciplinary offence that merits disciplinary action. The Company protects the identity of the whistle blower if the whistle blower so desires, however the whistle blower needs to attend any disciplinary hearing or proceedings as may be required for investigation of the complaint. The mechanism provides for a detailed complaint and investigation process. If circumstances so require, the employee can make a complaint directly to the Chairman of the Audit Committee. The Company also provides a platform to its employees for having direct access to the MD and CEO of the Company for raising any concerns. It is through CEO Konnect (ceokonnect@punjlloyd.com).

Mr. Dinesh Thairani, Company Secretary is the Compliance Offi cer. The confi dentiality of those reporting violations is maintained and they are not subjected to any discriminatory practice.

SHAREHOLDER INFORMATION

GENERAL BODY MEETINGS

The date, time and venue of the last three Annual General Meetings are given below.

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201453

Table 9: Details of last three Annual General Meetings

Financial year Date Time VenueNo. of Special

Resolutions Passed

2010-11 August 12, 2011 10.30 A.M. Air Force Auditorium, Subroto ParkNew Delhi 110010

2

2011-12 July 31, 2012 10.30 A.M. Air Force Auditorium, Subroto ParkNew Delhi 110010

1

2012-13 August 02, 2013 10.30 A.M. Air Force Auditorium, Subroto ParkNew Delhi 110010

1

ANNUAL GENERAL MEETING 2014

Date Monday, August 04, 2014

Venue Air Force Auditorium Subroto Park New Delhi 110 010

Time 10.30 A.M.

Book Closure Monday, July 28, 2014 to Monday, August 04, 2014 (both days inclusive)

CALENDAR OF FINANCIAL YEAR ENDED MARCH 31, 2014

The meetings of Board of Directors for approval of Quarterly Financial Results during the fi nancial year ended March 31, 2014 were held on the following dates:

First quarter August 02, 2013

Second quarter November 01, 2013

Third quarter February 14, 2014

Fourth quarter and Annual May 20, 2014

TENTATIVE CALENDAR FOR FINANCIAL YEAR ENDING MARCH 31, 2015

The tentative dates of meeting of Board of Directors for consideration of quarterly fi nancial results for the fi nancial year ending March 31, 2015 are as follows:

First quarter Second week of August 2014

Second quarter Second week of November 2014

Third quarter Second week of February 2015

Fourth quarter and annual Second week of May 2015

LISTING DETAILS

Name of Stock Exchange Stock code / Trading Symbol

BSE Limited (BSE) 532693

National Stock Exchange of India Limited (NSE) PUNJLLOYD

ISIN INE701B01021

CORPORATE GOVERNANCE REPORT54

LISTING FEES Annual listing fees for the year 2014-15 has been paid by the Company to the Stock Exchanges.

DEPOSITORY FEES Annual Custody /Issuer fees for the year 2014-15 is being paid by the Company to National Securities Depositories Limited (NSDL) and Central Depository Services (India) Limited (CDSL).

DEBT SECURITIES 1. Listing on Wholesale Debt Market (WDM) on BSE2. Debenture Trustee (a) IDBI Trusteeship Services Limited (b) AXIS Trustee Services Limited

STOCK DATATable 10 below gives the monthly high and low prices and volumes of Company’s (Punj Lloyd) equity shares at BSE Limited (BSE) and the National Stock Exchange Limited (NSE) for the year 2013-14.

Table 10: High and Low Prices and Trading Volumes at the BSE and NSE

MonthBSE (In Rs. Per share) NSE (In Rs. Per share)

High Low Volume (Nos.) High Low Volume (Nos.)

APR 2013 56.20 49.15 2,26,27,780 56.30 49.10 8,89,51,120

May 2013 57.80 42.70 2,26,63,455 57.85 42.70 8,75,69,627

JUN 2013 45.55 31.30 1,80,70,844 45.60 31.25 7,27,44,996

JUL 2013 37.15 23.35 2,00,20,656 37.15 23.25 8,90,64,212

AUG 2013 26.50 20.30 1,80,09,196 26.75 20.30 7,71,50,388

SEP 2013 26.20 20.25 1,07,15,056 26.20 20.10 5,79,98,442

OCT 2013 30.70 22.15 2,18,33,678 30.70 22.30 11,43,90,679

NOV 2013 30.25 25.00 1,19,19,922 30.25 24.90 4,72,08,043

DEC 2013 30.30 26.45 1,28,30,670 30.10 26.30 4,66,42,240

JAN 2014 33.15 24.90 1,88,14,723 33.20 24.80 6,47,48,337

FEB 2014 33.00 25.60 1,27,91,078 32.95 25.60 3,83,23,322

MAR 2014 29.90 25.40 1,26,44,827 29.90 25.40 4,57,79,574

Source: BSE and NSE website

STOCK PERFORMANCE

Chart A: Share prices of Punj Lloyd Limited verses Sensex Chart B: Share prices of Punj Lloyd Limited verses Nifty

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201455

SHARE TRANSFER AGENTS AND SHARE TRANSFER AND DEMAT SYSTEM

The Company registers share transfers through its share transfer agents, whose details are given below.

Karvy Computershare Pvt. Ltd.Karvy HousePlot No. 17-24, Vittal Rao Nagar, Madhapur, Hyderabad 500081Tel.: +91-40-44655000Fax: +91-40-23420814 / 57E-mail: einward.ris@karvy.com

In compliance with the SEBI circular dated December 27, 2002, requiring share registry in terms of both physical and electronic mode to be maintained at a single point, Punj Lloyd has established connections with National Securities Depositories Limited (NSDL) and Central Depository Services (India) Limited (CDSL), the two depositories, through its Share Transfer Agent. Shares received in physical form are processed and the share certifi cates are returned within 10 to 15 days from the date of receipt, subject to the documents being complete and valid in all respects.

The Company’s equity shares are under compulsory dematerialised trading. Shares held in the dematerialised form are electronically held with the Depositories. The Registrar and Share Transfer Agent of the Company periodically receives data regarding the benefi ciary holdings, so as to enable them to update their records and send all corporate communications, etc.

As on March 31, 2014, there were 387196 shareholders holding 332072798 shares of Rs. 2/- each in electronic form. This constitutes 99.99% of the total paid up capital of the Company.

The Company obtains half-yearly certifi cate of compliance from a Company Secretary in Practice, with regard to the share transfer formalities as required under Clause 47(c) of the Listing Agreement and fi les same with the Stock Exchanges.

There are no legal proceedings against the Company on any share transfer matter. Table 11 gives details about the nature of complaints and their status as on March 31, 2014.

Green Initiative

The Ministry of Corporate Affairs (MCA) had undertaken a “Green Initiative in Corporate Governance” by allowing paperless compliances by Companies, whereby companies have been permitted to send various notices / documents to its shareholders through electronic mode to the registered e-mail addresses of shareholders.

Securities and Exchange Board of India (SEBI) have also, in line with the aforesaid MCA initiatives, permitted listed entities to supply soft copies of annual reports to all those shareholders who have registered their email addresses for the purpose.

In view of the Green Initiatives announced as above, the Company shall send all documents to Shareholders like General Meeting Notices (including AGM), Annual Reports comprising Audited Financial Statements, Directors’ Report, Auditors’ Report and any other future communication (hereinafter referred as “documents”) in electronic form, in lieu of physical form, to all those shareholders, whose email address is registered with Depository Participant (DP) / Registrars & Share Transfer Agents (RTA) (hereinafter “registered email address’) and made available to us, which has been deemed to be the shareholder’s registered email address for serving document.

To enable the servicing of documents electronically to the registered email address, we request the shareholders to keep their email addresses validated/ updated from time to time. We wish to reiterate that Shareholders holding shares in electronic form are requested to please inform any changes in their registered e-mail address to their DP from time to time and Shareholders holding shares in physical form have to write to our Registrar and Transfer Agent, at their specifi ed address, so as to update their registered email address from time to time.

Please note that the Annual Report of the Company will also be available on the Company’s website www.punjlloyd.com for ready reference. Shareholders are also requested to take note that they will be entitled to be furnished, free of cost, the aforesaid documents, upon receipt of requisition from the shareholder, any time, as a member of the Company.

Transfer of unpaid / unclaimed amounts to Investor Education and Protection Fund

During the year, the Company has credited Rs. 52865 lying in the unpaid / unclaimed dividend account, to the Investor Education and Protection Fund pursuant to Section 205C of the Companies Act 1956 read with the Investor Education and Protection Fund (Awareness and Protection of Investors) Rules 2001.

Table 11: Number and nature of complaints for the year 2013-14

ParticularsNon-Receipt

of Certifi catesNon-receipt of dividend

Others (Non-Receipt of Annual Reports/ Non Receipt of Demat credit, etc.)

Total

Received during the year 2 26 7 35

Attended during the year 2 26 7 35

Pending as on March 31, 2014 - - - -

EQUITY SHARES IN THE SUSPENSE ACCOUNTAs per Clause 5A(1) of the Listing Agreement, an aggregate of 2310 equity shares are lying in the suspense account in respect of 41 shareholders. None of the shareholders approached the Company for transfer of shares from suspense account during the year. The voting rights on the shares outstanding in the suspense account as on March 31, 2014 shall remain frozen till the rightful owner of such shares claims the shares.

SHAREHOLDING PATTERN AND DISTRIBUTIONTables 12 and 13 gives the shareholding pattern and distribution.

CORPORATE GOVERNANCE REPORT56

Table 12: Shareholding Pattern as on March 31, 2014

CategoryAs on March 31, 2014

Total No. of shares Percentage

A. Shareholding of Promoter and Promoter Group

a. Indian Promoters 46501013 14.00

b. Foreign Promoters 77121970 23.22

Total shareholding of Promoter & Promoter Group 123622983 37.23

B. Public Shareholding

1. Institutions

a. Mutual Funds / UTI 704056 0.21

b. Banks / Financial Institutions 22587423 6.80

c. Foreign Institutional Investors 34118961 10.27

2. Non-Institutions

a. Bodies Corporate 25974012 7.82

b. Resident Individuals 115601794 34.81

3. Others

a. Non Resident Indians 6919023 2.08

b. Trusts 50330 0.02

c. Clearing Members 2517163 0.76

Total Public Shareholding 208472762 62.77

C. Shares held by Custodians and against which Depository Receipts have been issued

a. Promoter & Promoter Group Nil N.A.

b. Public Nil N.A.

Grand Total 332095745 100.00

Table 13: Distribution of shareholding by share class as on March 31, 2014

S.No Shareholding Class No of shareholders % of Shareholders No of shares held Shareholding %

1 1 - 5000 391428 99.32 93386276 28.12

2 5001 - 10000 1524 0.39 11204103 3.37

3 10001 - 20000 584 0.15 8350896 2.51

4 20001 - 30000 186 0.05 4610804 1.39

5 30001 - 40000 85 0.02 3072498 0.93

6 40001 - 50000 59 0.01 2723289 0.82

7 50001 - 100000 85 0.02 6147785 1.85

8 100001 and above 139 0.04 202600094 61.01

Total: 394090 100.00 332095745 100.00

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201457

PLANT LOCATIONS

The Company is engaged in providing integrated design, engineering procurement, construction and project management services for energy and infrastructure sector. The projects are executed at the sites provided by the clients. The Company has a Central workshop situated at Banmore, Madhya Pradesh for carrying out repair and maintenance of construction equipment. For its defence business and for precision machining and systems integration, the Company has a machining and integration facilities at Plot No. Part of L1, Industrial Area, Ghirongi, Malanpur, Dist. Bhind, Madhya Pradesh.

INVESTOR CORRESPONDENCE ADDRESS

Company

Mr. Dinesh ThairaniCompliance Offi cer Punj Lloyd LimitedCorporate Offi ce I, 78, Institutional Area, Sector 32, Gurgaon 122001Tel. No. +91-124 2620493; Fax No. +91-124-2620111E-mail: investors@punjlloyd.com

Registrars

Mr. K. S. ReddyAssistant General ManagerKarvy Computershare Private LimitedPlot No. 17-24, Vittal Rao Nagar, Madhapur, Hyderabad- 500 081Tel.: +91-40-44655000; Fax: +91-40-23420814 E-mail: einward.ris@karvy.com

Depositories

National Securities Depository LimitedTrade World, 4th Floor, Kamala Mills Compound, Senapati Bapat MargLower Parel, Mumbai 400013Tel.: +91-22-2499 4200; Fax: +91-22-2497 6351E-mail: info@nsdl.co.in

Central Depository Services (India) LimitedPhiroze Jeejeebhoy Towers, 17th Floor, Dalal StreetMumbai 400 001Tel.: +91-22-2272 3333; Fax: +91-22-2272 3199E-mail: investors@cdslindia.com

For Punj Lloyd Limited

Atul PunjChairman

Place: Gurgaon Date: May 20, 2014

AUDITOR’S CERTIFICATE ON COMPLIANCE WITH THE CONDITIONS OF CORPORATE GOVERNANCE UNDER CLAUSE 49 OF THE LISTING AGREEMENT

To,The Members of Punj Lloyd Limited

We have examined the compliance of conditions of Corporate Governance by Punj Lloyd Limited (“the Company”) for the year ended on March 31, 2014, as stipulated in clause 49 of the listing agreement of the Company with the stock exchanges.

The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company, for ensuring the compliance of the conditions of Corporate Governance as stipulated in said clause. It is neither an audit nor an expression of opinion on the fi nancial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, and based on the representations made by the Directors and the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned listing agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the effi ciency or effectiveness with which the management has conducted the affairs of the Company.

For Walker Chandiok & Co LLP(Formerly walker, chandiok & Co)Chartered AccountantsFirm Registration No: 001076N

per David JonesPartnerMembership No. 098113

Place : GurgaonDate : May 20, 2014

CEO/CFO CERTIFICATION

To,The Board of Directors,Punj Lloyd LimitedCorporate Offi ce 1, 78, Institutional Area, Sector 32,Gurgaon 122 001

Dear Sirs,

We, the undersigned hereby certify to the Board that:

(a) We have reviewed fi nancial statements and the cash fl ow statement for the year ended 31st March, 2014 and that to the best of our knowledge and belief:

(i) These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading:

(ii) These statements together present a true and fair view of the Company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations.

(b) There are, to the best of our knowledge and belief, no transactions entered into by Punj Lloyd Limited during the year which are fraudulent, illegal or violative of the company’s code of conduct.

(c) We accept responsibility for establishing and maintaining internal controls for fi nancial reporting in Punj Lloyd Limited and we have evaluated the effectiveness of the internal control systems of the company pertaining to fi nancial reporting. We have disclosed to the auditors and the audit Committee defi ciencies in the design or operation of such internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these defi ciencies.

(d) We have indicated to the auditors and Audit Committee

(i) Signifi cant changes in internal control over fi nancial reporting during the year;

(ii) Signifi cant changes in accounting policies during the year and the same have been disclosed in the notes to the fi nancial statements; and

(iii) Instances of signifi cant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a signifi cant role in the Company’s internal control system over fi nancial reporting.

Yours Faithfully

J.P. Chalasani P.N. KrishnanDirector & Group CEO Director -Finance

Place : GurgaonDate : May 20, 2014

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Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201461

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stru

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ngin

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FINANCIALS(A

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arch

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Equ

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the

Com

pani

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rela

ting

to th

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s

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201463

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FINANCIALS66

REPORT OF THE INDEPENDENT AUDITORS ON THE ABRIDGED FINANCIAL STATEMENTS

To the Members of Punj Lloyd Limited

The accompanying abridged fi nancial statements, which comprise of the abridged Balance Sheet as at March 31, 2014, the abridged Statement of Profi t and Loss and the abridged Cash Flow Statement for the year then ended, and related notes, are derived from the audited fi nancial statements of Punj Lloyd Limited (‘the Company’) for the year ended March 31, 2014. Our report on those audited fi nancial statements dated May 20, 2014 contained an Emphasis of Matter, reproduced below in this report.

The abridged fi nancial statements do not contain all the disclosures required by the accounting principles generally accepted in India, including the Accounting Standards notifi ed underthe Companies Act, 1956 (“the Act”) read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013 applied in the preparation of the audited fi nancial statements of the Company. Reading the abridged fi nancial statements, therefore, is not a substitute for reading the audited fi nancial statements of the Company.

Management’s Responsibility for the Abridged Financial StatementsManagement is responsible for the preparation of the abridged fi nancial statements in accordance with Rule 7A of Companies (Central Government’s) General Rules and Forms (Amendment) Rules, 2012 notifi ed pursuant to section 219(1)(b)(iv) of the Act, which are derived from the audited fi nancial statements for the year ended March 31, 2014 prepared in accordance with the Accounting Standards notifi ed underthe Companies Act, 1956 (“the Act”) read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013 and accounting principles generally accepted in India.

Auditors’ ResponsibilityOur responsibility is to express an opinion on the abridged fi nancial statements based on our procedures, which were conducted in accordance with Standard on Auditing (SA) 810, “Engagements to Report on Summary Financial Statements” issued by the Institute of Chartered Accountants of India.

OpinionIn our opinion, the abridged fi nancial statements derived from the audited fi nancial statements of the Company as at and for the year ended March 31, 2014 are a fair summary of those fi nancial statements, in accordance with the Rule 7A of the Companies (Central Government’s) General Rules and Forms (Amendment) Rules, 2012 notifi ed pursuant to section 219(1)(b)(iv) of the Act.

Emphasis of MatterWithout qualifying our opinion, we draw attention to:

a) note 13 to the abridged fi nancial statements, regarding recoverability of claims aggregating to Rs. 733.98 crores which are subject matter of conciliation. Pending ultimate outcome of the matter which is presently unascertainable, no adjustments have been made in the accompanying abridged fi nancial statements.

b) As reported by the Independent Auditors of the fi nancial statements of the Company’s Branch in Thailand, we draw attention to note 14 to the abridged fi nancial statements, regarding recoverability of claims aggregating to Rs. 389.86 crores. Pending ultimate outcome of the matter which is presently unascertainable, no adjustments have been made in the accompanying abridged fi nancial statements.

c) note 10 to the abridged fi nancial statements in respect of deductions made / amount withheld by some customers aggregating to Rs. 53.91 crores which are being carried as trade receivables. These amounts are outstanding due to disputes with the customers and presently the ultimate outcome of these disputes is unascertainable, however since the Company is of the view that these amounts are recoverable, no provision is required against the same.

Other Matter We did not audit the fi nancial statements of certain branches and an un-incorporated joint venture included in the abridged fi nancial statements, whose fi nancial statements refl ect total assets (net of eliminations) of Rs. 4,417.00 crores as at March 31, 2014; total revenues (net of eliminations) of Rs. 3,455.27 crores and net cash fl ows aggregating to Rs. 22.31crores for the year then ended. These fi nancial statements have been audited by other auditors whose audit reports have been furnished to us,and our audit opinion on the abridged fi nancial statements of the Company for the year then ended to the extent they have been derived from suchfi nancial statementsnot audited by us as stated in this paragraph is based solely on the audit reports of the other auditors. Our opinion is not qualifi ed in respect of this matter.

For Walker Chandiok & Co LLP(Formerly Walker, Chandiok & Co)Chartered AccountantsFirm Registration No. 001076N

per David JonesPartnerMembership No. 098113

Place: GurgaonDate: May 20, 2014

ABRIDGED 2013-14

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201467

To the Members of Punj Lloyd Limited

Report on the Financial Statements1. We have audited the accompanying fi nancial statements

of Punj Lloyd Limited, (“the Company”), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profi t and Loss and Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements2. Management is responsible for the preparation of these fi nancial

statements, that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards notifi ed under the Companies Act, 1956 (“the Act”) read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial

statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements.

5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion6. In our opinion and to the best of our information and according

to the explanations given to us and based on the considerations of the reports of the other auditors on the fi nancial statements of the branches and an unincorporated joint venture as noted below, the fi nancial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014 ;

ii) in the case of the Statement of Profi t and Loss, of the profi t for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.

Emphasis of Matter7. Without qualifying our opinion, we draw attention to:

a. note 41 to the fi nancial statements, regarding recoverability of claims aggregating to Rs. 733.98 crores which are subject matter of conciliation. Pending ultimate outcome of the matter which is presently unascertainable, no adjustments have been made in the accompanying fi nancial statements.

b. As reported by the Independent Auditors of the fi nancial statements of the Company’s branch in Thailand, we draw attention to note 42 to the fi nancial statement, regarding recoverability of claims aggregating to Rs. 389.86 crores. Pending ultimate outcome of the matter which is presently unascertainable, no adjustments have been made in the accompanying fi nancial statements.

c. note 36 to the fi nancial statements in respect of deductions made / amount withheld by some customers aggregating to Rs. 53.91 crores which are being carried as trade receivables. These amounts are outstanding due to disputes with the customers and presently the ultimate outcome of these disputes is unascertainable, however since the Company is of the view that these amounts are recoverable, no provision is required against the same.

Report on Other Legal and Regulatory Requirements8. As required by the Companies (Auditor’s Report) Order, 2003

(“the Order”) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specifi ed in paragraphs 4 and 5 of the Order.

REPORT OF THE INDEPENDENT AUDITORS ON THE FINANCIAL STATEMENTS

FINANCIALS68

9. As required by Section 227(3) of the Act, we report that:

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from branches and an unincorporated joint venture not visited by us.;

c. we have received the reports on the fi nancial statements of the branches and an unincorporated joint venture audited under section 228 by other auditors and have appropriately dealt with these while forming our audit opinion.

d. the fi nancial statements dealt with by this report are in agreement with the books of account and with the returns received from the branches and an unincorporated joint venture not visited by us;

e. in our opinion, the fi nancial statements comply with the Accounting Standards notifi ed under the Companies Act, 1956 read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013 ; and

f. on the basis of written representations received from the directors, as on March 31, 2014 and taken on record by the Board of Directors, none of the directors is disqualifi ed as on March 31, 2014 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act.

Other Matter 10. We did not audit the fi nancial statements of certain branches,

and an unincorporated joint venture, included in the fi nancial statement, whose fi nancial statements refl ect total assets (net of elimination) of Rs. 4,417.00 crores as at March 31, 2014, total revenues (net of eliminations) of Rs. 3,455.27 crores and net cash fl ows aggregating to Rs. 22.31 crores for the year then ended. These fi nancial statements have been audited by other auditors whose audit reports have been furnished to us by the management, and our audit opinion on the fi nancial statements of the Company for the year then ended to the extent they relate to the fi nancial statements not audited by us as stated in this paragraph is based solely on the audit reports of the other auditors. Our opinion is not qualifi ed in respect of this matter.

For Walker Chandiok & Co LLP(Formerly Walker, Chandiok & Co)Chartered AccountantsFirm Registration No. 001076N

per David JonesPartnerMembership No. 098113

Place: GurgaonDate: May 20, 2014

REPORT OF THE INDEPENDENT AUDITORS ON THE FINANCIAL STATEMENTS

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201469

Based on the audit procedures performed for the purpose of reporting a true and fair view on the fi nancial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fi xed assets.

(b) The Company has a regular program of physical verifi cation of its fi xed assets under which fi xed assets are verifi ed in a phased manner over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verifi cation.

(c) In our opinion, a substantial part of fi xed assets has not been disposed off during the year.

(ii) (a) The management has conducted physical verifi cation of inventory at reasonable intervals during the year.

(b) The procedures of physical verifi cation of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies between physical inventory and book records were noticed on physical verifi cation.

(iii) (a) The Company has not granted any loan, secured or unsecured to companies, fi rms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4 (iii) (b) to 4 (iii) (d) of the Order are not applicable.

(e) The Company has not taken any loan, secured or unsecured from companies, fi rms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(f) and 4(iii)(g) of the Order are not applicable.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fi xed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

(v) (a) In our opinion, the particulars of all contracts or arrangements that need to be entered into the register maintained under Section 301 of the Act have been so entered.

(b) In respect of transactions made in pursuance of such contracts or agreements exceeding the value of Rupee fi ve lakhs entered into during the fi nancial year, because of the unique and specialized nature of the items involved, no comparison of prices paid can be made with prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the

Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

(vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act in respect of Company’s products and services and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income- tax, sales-tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues, as applicable, have not been regularly deposited with the appropriate authorities and there have been delays in a large number of cases. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they become payable.

(b) The dues outstanding in respect of income-tax, sales-tax, wealth tax, service tax, custom duty, excise duty, cess on account of any dispute, are as follows:

ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT OF EVEN DATE TO THE MEMBERS OF PUNJ LLOYD LIMITED, ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2014

FINANCIALS70

Name of the statute Nature of duesAmount

outstanding in crores (Rs.)

Period to which the amount relates

Forum where dispute is pending

Andhra Pradesh General Sales Tax Act 1956

Sales tax on the material components of the works contract

0.261998-99 and 2000-01

Sales Tax Appellate Tribunal Hyderabad, Andhra Pradesh

Andhra Pradesh General Sales Tax Act 1956

Sales tax on the material components of the works contract.

2.232001-02 and 2002-03

Assessing Offi cer, Hyderabad, Andhra Pradesh

Andhra Pradesh General Sales Tax Act 1956

Mis-use of concessional Form G against purchase of Cement

2.192001-02 to 2004-05

Sales Tax Appellate Tribunal, Vizag, Andhra Pradesh

Andhra Pradesh General Sales Tax Act 1956

Mis-use of concessional Form G against purchase of Cement and LDO

5.892002-03 to 2004-05

Deputy Commissioner Sales Tax Appeal, Vizag, Andhra Pradesh.

Andhra Pradesh General Sales Tax Act 1956

Purchase of Cement escape turnover 0.44 2004-05Sales Tax Appellate Tribunal, Vizag, Andhra Pradesh

Bihar Value Added Tax Act 2005 Disallowance of labour and other charges 25.49 2009-10 Commercial Tax Tribunal

Bihar Value Added Tax Act 2005 Disallowance of labour and other charges 0.31 2011-12 Joint Commissioner Appeal

Chhatisgarh Entry Tax Act 1976Entry tax on materials and equipment brought in to the state

0.23 2005-06 Bilaspur High Court, Chhatisgarh

Gujarat Central Sales Tax Act 1956

Refund assessment not appreciated by the department and raised additional demand

2.55 2008-09Deputy Commissioner (Appeals)-Vadodara

Gujarat Sales Tax Act 1969 CST against Sales in Transit 0.07 2002-03Deputy Commissioner (Appeals)-Vadodara

Haryana Value Added Tax Act 2003

Disallowance of deduction 5.812003-04 to 2005-06

Sales tax Appellate Tribunal Chandigarh, Haryana

Karnataka Sales Tax Act,1957Interest on Entry Tax imposed by DCCT, Bangalore

0.23 2003-04Joint Commissioner (Appeal), Bangalore

Kerala Value Added Tax Act 2003

Disallowance of deduction 3.912005-06 and 2006-07

Deputy Commissioner (Appeals)-Ernakulam, Kerala

MP Commercial Tax Act, 1994Sales tax on the material components of the works contract

0.05 2003-04 High Court, Bhopal, MP

MP Entry Tax Act 1976Entry tax on materials and equipment brought into the state

0.01 2003-04 High Court, Bhopal, MP

MP Value Added Tax Act 2002VAT on sales in course of import and interest and penalty

3.182009-10 and 2010-11

Additional Commissioner Commercial Tax, Gwalior

MP Entry Tax Act 1976Entry tax on materials and equipment brought into the state

0.432009-10 and 2010-11

Additional Commissioner Commercial Tax, Gwalior

Maharashtra Value Added Tax Act 2002

VAT on transportation, travelling charges and penalty

1.092006-07 and 2008-09

Joint Commissioner (Appeal) Nasik, Maharashtra

Punjab Value Added Tax 2005 Disallowance of sales in transit 18.62 2011-12 Commercial Tax Tribunal

Rajasthan Tax on the entry of Goods in to the Local Area Act 1999

Entry Tax demand on materials equipment 0.91 2005-06High Court of Jodhpur, Rajasthan

Uttar Pradesh, Central Sales Tax Act 1956

Misuse of Form C against purchase of equipment

0.74 1998-99 Assessing Offi cer, Mathura

Uttar Pradesh Trade Tax Act 1948 Entry Tax demand and penalty 0.032000-01 and 2004-05

Commercial Tax Tribunal, Agra

Uttar Pradesh Trade Tax Act 1948 Entry Tax demand 0.02 1999-00 Joint Commissioner Appeal, Mathura

Uttar Pradesh Trade Tax Act 1948 Penalty imposed for non-submission of Behti 0.11 2010-11 Tribunal, Uttar Pradesh Trade Tax

West Bengal Value Added Tax, 2003

Non-submission of E-I forms and addition in turnover

26.87 2009-2010Joint Commissioner (Appeal), Midnapur (WB)

The Income Tax Act, 1961 Demand by Income tax department - 2004-05 to 2006-07

CIT Appeals

ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT OF EVEN DATE TO THE MEMBERS OF PUNJ LLOYD LIMITED, ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2014

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201471

Name of the statute Nature of duesAmount

outstanding in crores (Rs.)

Period to which the amount relates

Forum where dispute is pending

Central Excise Act, 1944 Non-payment of excise duty 0.73 2006-07Commissioner of Custom and Central Excise, Mumbai

The Finance Act 2004 and the Service Tax Rules

Penalty for late payment of service tax 18.872003-04, 2005-06 and 2006-07

CESTAT, Delhi

(x) In our opinion, the Company has no accumulated losses at the end of the fi nancial year and it has not incurred cash losses in the current and the immediately preceding fi nancial year.

(xi) In our opinion, the Company has not defaulted in repayment of dues to debenture-holders during the year; the Company has defaulted in repayment of principal and interest amounting to Rs. 56.81 crores to banks and fi nancial institutions for maximum period upto 74 days. As at year end, the Company has defaulted in repayment of below mentioned dues to the Banks which have been paid subsequent to the balance sheet date:

Particulars Amount in crores (Rs.) Period of delays

Repayment of Loan to Banks 9.58 Upto 80 days

Payment of Interest to Banks 0.53 Upto 74 days

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii) of the Order are not applicable.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefi t fund/ society. Accordingly, provisions of clause 4(xiii) of the Order are not applicable.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) In our opinion, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or fi nancial institutions are not, prima facie, prejudicial to the interest of the Company.

(xvi) In our opinion, the Company has applied the term loans for the purpose for which these loans were obtained.

(xvii) In our opinion, no funds raised on short-term basis have been used for long-term investment by the Company.

(xviii) During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

(xix) The Company has created security in respect of the outstanding debentures issued during previous years. No debentures have been

issued during the year.

(xx) The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable.

(xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

For Walker Chandiok & Co LLP(Formerly Walker, Chandiok & Co)Chartered AccountantsFirm Registration No. 001076N

per David JonesPartnerMembership No. 098113

Place: GurgaonDate: May 20, 2014

ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT OF EVEN DATE TO THE MEMBERS OF PUNJ LLOYD LIMITED, ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2014

(All amounts in INR Crores, unless otherwise stated)

F INANCIALS72

ABRIDGED BALANCE SHEET as at March 31, 2014

As at March 31, 2014 As at March 31, 2013 Equity and Liabilities Shareholders' funds (a) Paid-up share capital Equity 66.42 66.42 (b) Reserves and surplus Capital reserves (including revaluation reserves); 28.86 29.22 Revenue reserves; 2,692.80 2,798.06 Surplus 962.33 954.52 Non-current liabilities (a) Long-term borrowings 1,248.39 1,297.30 (b) Deferred tax liabilities (net) 128.61 128.48 (c) Other liabilities 28.27 - (d) Provisions 1.16 0.11 Current liabilities (a) Short-term borrowings 3,521.89 3,287.46 (b) Trade payables 2,300.14 2,082.66 (c) Other current liabilities 3,023.54 3,237.55 (d) Provisions 78.31 67.27

Total 14,081.26 13,949.05 Assets

Non-current assets (a) Fixed assets Tangible assets (original cost less depreciation) 1,507.06 1,630.74 Intangible assets (original cost less amortisation) 3.05 4.01 (b) Non-current investments Unquoted 1,573.45 690.36 Quoted (Market value: Rs. 6.42 crores (Previous year Rs. 1.40 crores)) 5.10 0.10 (c) Deferred tax assets (net) 2.41 3.28 (d) Loans and advances 564.65 481.54 (e) Other assets 107.79 102.66

Current assets (a) Inventories 122.60 171.96 (b) Unbilled revenue (work-in-progress) 6,073.53 5,196.10 (c) Trade receivables 2,377.72 2,903.58 (d) Cash and bank balances (refer note 2) 176.31 191.21 (e) Loans and advances 1,457.46 2,512.10 ( f ) Other assets 110.13 61.41

Total 14,081.26 13,949.05

(All amounts in INR Crores, unless otherwise stated)

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201473

ABRIDGED BALANCE SHEET as at March 31, 2014

Annexure I forms an integral part of the abridged fi nancial statement. This is the abridged balance sheet referred to in our report of even date.

For Walker Chandiok & Co LLP For and on behalf of the Board of Directors of Punj Lloyd Limited(Formerly Walker, Chandiok & Co) Chartered Accountants

per David Jones Partner

Place GurgaonDate May 20, 2014

Atul Punj J.P. Chalasani Chairman Managing Director & Group CEODIN: 00005612 DIN: 00308931

P.N. Krishnan Dinesh Thairani Director - Finance Group President - Legal & Company SecretaryDIN: 00003925

(All amounts in INR Crores, unless otherwise stated)

F INANCIALS74

ABRIDGED STATEMENT OF PROFIT AND LOSS for the year ended on March 31, 2014

Year ended March 31, 2014 Year ended March 31, 2013

Income Revenue from operations 7,304.99 8,093.04 Sales of traded goods 924.18 273.02 Other operational revenue 244.95 205.35 Other income 36.97 21.58 Total income 8,511.09 8,592.99 Expenses Project material consumed and cost of goods sold 3,364.27 2,829.49 Contractor charges 2,128.64 2,294.23 Employee benefi ts expense 829.68 954.38 Other expenses 1,160.58 1,577.35 Total expenses 7,483.17 7,655.45 Earnings before interest, tax, depreciation and amortization (EBITDA) 1,027.92 937.54 Depreciation and amortization expenses (net) 244.76 227.88 Finance costs 771.15 679.53 Profi t before tax 12.01 30.13 Tax expense:

Current tax 2.90 6.20Minimum alternate tax credit entitlement - (0.94)Deferred tax 1.30 5.25

Total tax expenses 4.20 10.51 Profi t after tax for the year 7.81 19.62 Earnings per share [nominal value per share Rs. 2 each (Previous year Rs. 2)]:

Basic and Diluted (in Rs.) 0.24 0.59

Annexure I forms an integral part of the abridged fi nancial statement.

This is the abridged statement of profi t and loss referred to in our report of even date.

For Walker Chandiok & Co LLP For and on behalf of the Board of Directors of Punj Lloyd Limited(Formerly Walker, Chandiok & Co) Chartered Accountants

per David Jones Partner

Place GurgaonDate May 20, 2014

Atul Punj J.P. Chalasani Chairman Managing Director & Group CEODIN: 00005612 DIN: 00308931

P.N. Krishnan Dinesh Thairani Director - Finance Group President - Legal & Company SecretaryDIN: 00003925

(All amounts in INR Crores, unless otherwise stated)

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201475

ABRIDGED CASH FLOW STATEMENT for the year ended on March 31, 2014

Year ended March 31, 2014 Year ended March 31, 2013

A. Cash fl ow from/ (used in) operating activities 583.94 (161.17)B. Cash fl ow used in investing activities (66.22) (68.44)C. Cash fl ow (used in) / from fi nancing activities (422.15) 147.29

Net increase / (decrease) in cash and cash equivalent (A+B+C) 95.57 (82.32)Exchange differences (118.15) 8.38 Cash and cash equivalent at beginning of the year 173.06 247.00

Cash and cash equivalent at end of the year (also refer note 2) 150.48 173.06

Annexure I forms an integral part of the abridged fi nancial statement.

This is the abridged cash fl ow statements referred to in our report of even date.

For Walker Chandiok & Co LLP For and on behalf of the Board of Directors of Punj Lloyd Limited(Formerly Walker, Chandiok & Co) Chartered Accountants

per David Jones Partner

Place GurgaonDate May 20, 2014

Atul Punj J.P. Chalasani Chairman Managing Director & Group CEODIN: 00005612 DIN: 00308931

P.N. Krishnan Dinesh Thairani Director - Finance Group President - Legal & Company SecretaryDIN: 00003925

(All amounts in INR Crores, unless otherwise stated)

F INANCIALS76

(The note numbers appearing in the brackets “[ ]” are as they appear in the complete set of fi nancial statements)

1. Basis of preparation These abridged fi nancial statements have been prepared in accordance with the requirements of Rule 7A of the Companies

(Central Government’s) General Rules and Forms, 1956 and clause 32 of the Listing Agreement. These abridged fi nancial statements have been prepared on the basis of the complete set of fi nancial statements for the year ended March 31, 2014.

2. [17] Cash and bank balances

As at March 31, 2014 As at March 31, 2013

Cash and cash equivalents

Balances with banks: On current accounts # 141.68 152.41 On cash credit accounts 0.13 14.28 On EEFC account 0.01 0.48 Deposit with original maturity of less than three months 3.40 3.13 Cash on hand 5.26 2.76

150.48 173.06 Other bank balances

Deposits with original maturity for more than 12 months* 1.62 1.53 Margin money deposit** 24.21 16.62

25.83 18.15 Total cash and bank balances 176.31 191.21

# Include unclaimed dividend of Rs. 0.26 crores (Previous year Rs. 0.27 crores).* Fixed deposits pledged for Rs 1.62 crores (Previous year Rs 1.53 crores) against guarantees. ** Margin money deposits with a carrying amount of Rs. 24.21 crores (Previous year Rs. 16.62 crores) are subject to fi rst charge to secure the Company’s cash credit loans.

3. [31] Capital and other commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advance) is Rs 18.88 crores (Previous year Rs. 9.95 crores).

(b) Estimated future investments in joint venture and other companies in terms of respective shareholders agreements is Rs. Nil (Previous year Rs. 24.99 crores).

(c) Comfort letter given for utilization of export benefi t obligations of a subsidiary company is Rs. Nil (Previous year Rs. 2.99 crores).(d) For commitments relating to lease arrangements, please refer note 5.

4. [32] Contingent liabilities

As at March 31, 2014 As at March 31, 2013

a) Liquidated damages deducted by customers not accepted by the Company and pending fi nal settlement. # 170.05 171.75

b) Corporate guarantees given on behalf of subsidiaries, joint ventures and associates 3,020.20 4,389.74c) Sales tax demands: *

on disallowance of deduction on labour and services of the works contracts pending with sales tax authorities and High Court 22.35 22.82for non submission of statutory forms - 6.60 for purchases against sales tax forms not accepted by department 8.61 8.61 against the central sales tax demand on sales in transit 0.07 0.07 for non-admissible of deduction of supply turnover 2.77 2.77

d) Entry tax demands against entry of goods into the local area not accepted by department. * 4.08 4.49

ANNEXURE I – NOTES TO THE ABRIDGED FINANCIAL STATEMENTS

(All amounts in INR Crores, unless otherwise stated)

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201477

# excludes possible liquidated damages which can be levied by customers for delay in execution of projects. The management, based on consultation with various experts, believes that there exist strong reasons why no liquidated damages shall be levied by these customers. Although, there can be no assurances, the Company believes, based on information currently available, that the ultimate resolution of these proceedings is not likely to have an adverse effect on the results of operations, fi nancial position or liquidity of the Company.

*Based on favorable decisions in similar cases/legal opinions taken by the Company/consultations with solicitors, the management believes that the Company has good chances of success in above mentioned cases and hence, no provision there against is considered necessary

e) On March 17, 2010, the Company was subjected to a search and seizure operation under Section 132 and survey under Section 133A of the Income tax Act, 1961. During the search and seizure operation, statements of Company’s offi cials were recorded in which they were made to offer some unaccounted income of the Company for the fi nancial year 2009-10. The Company believes that the above statements were made under undue mental pressure and physical exhaustion and therefore Company has retracted the above statements subsequently. The Company has fi led fresh returns of income for Assessment years 2004-05 to 2009-10 in pursuance of the notices dated August 25, 2010 from the Income Tax Department (“the Department”). The Department has completed the assessments for the assessment years 2004-05 to 2010-11 and has issue demands aggregating to Rs. 229.13 crores, by making some frivolous additions to the total income of the Company, which has been adjusted against the income tax refunds of the said/subsequent years. The Company has fi led the appeals against these additions on January 27, 2012 and June 12, 2013 and based on the expert opinion, the Company is hopeful that it will get relief in appeal.

f) On January 20, 2014, the Company was subjected to an investigation by Directorate General of Central Excise Intelligence (DGCEI) on various service tax compliance matters. The Company is furnishing the requisite information and the same is currently being scrutinized/ inquired by DGCEI as per the provisions of the Finance Act, 1994 (as amended). The amount of demand, if any, can be ascertained only upon completion of the said inquiry.

g) The Company, directly or indirectly through its subsidiaries, is severally or jointly involved in certain legal cases with its customers / vendors. The management believes that due to the nature of these disputes and in view of signifi cant uncertainty over the ultimate outcome of the said cases, the amount of exposure, if any, is not currently determinable.

h) The Company has undertaken to provide continued fi nancial support to its below mentioned subsidiaries and step-down subsidiaries:i) Punj Lloyd Pte Limitedii) PT Punj Lloyd Indonesiaiii) PT Sempec Indonesiaiv) Punj Lloyd Aviation Pte Limitedv) PL Delta Renewables Pte Limitedvi) PL Global Developers Pte Limited (formerly known as Punj Lloyd Singapore Pte Limited)vii) Punj Lloyd Infrastructure Pte Limitedviii) Punj Lloyd Engineers and Constructors Pte Limitedix) PLI Ventures Limited x) PLI Ventures Advisory Services Private Limited

5. [26] Leasesa) Finance lease The Company has fi nance leases and hire purchase contracts for certain project equipments, vehicles and building, the cost of which is

included in the gross block of plant and equipment, vehicles and buildings respectively under tangible assets. The lease term is for one to ninety nine years. There is no escalation clause in the lease agreements. There are no restrictions imposed by lease arrangements.

2013-14 2012-13

Gross block at the end of fi nancial year 215.24 115.50 Written down value at the end of fi nancial year 181.57 110.36 Details of payments made during the year:   Principal 17.53 3.88 Interest 2.48 0.52

The break-up of minimum lease payments outstanding as at reporting date is as under:

As at March 31, 2014 As at March 31, 2013

Principal Interest Total Principal Interest Total

Payable within one year 32.57 10.85 43.42 4.17 0.37 4.54 Payable after one year but before end of fi fth year 53.47 7.32 60.79 2.33 0.10 2.43

ANNEXURE I – NOTES TO THE ABRIDGED FINANCIAL STATEMENTS

(All amounts in INR Crores, unless otherwise stated)

F INANCIALS78

b) Operating lease The Company has entered into commercial leases for offi ce premises. There are no contingent rents in the lease agreements. The

lease term is for 1-3 years and is renewable at the mutual agreement of both the parties. There is no escalation clause in the lease agreements. There are no restrictions imposed by lease arrangements.

The break-up of the future minimum lease payments outstanding as at reporting date is as under:

As at March 31, 2014 As at March 31, 2013

Not later than one year 2.08 0.01 Later than one year and not later than fi ve years 2.63 - Later than fi ve years - -

6. [29] Segment information

Primary segment: Business segments-

The Company has identifi ed the business segment as its primary reportable segment. The Company’s operating businesses are organized and managed separately according to the nature of products and services provided. The Company has identifi ed Engineering, procurement and construction services and Trading of goods as its two reportable segments. A description of the types of products and services provided by each reportable segment is as follows:

Engineering, procurement and construction segment include providing of engineering, procurement and construction services in oil, gas and infrastructure sectors.

Trading of goods includes purchase and sale of steel, mainly outside India.

The following table presents segment revenue, results, assets and liabilities in accordance with AS 17 – Segment Reporting as on March 31, 2014 and March 31, 2013:

Engineering, procurement and construction services Traded goods Corporate unallocable Total

2013-14 2012-13 2013-14 2012-13 2013-14 2012-13 2013-14 2012-13

Revenue

External revenue 7,226.81 8,025.87 924.18 273.02 78.18 67.17 8,229.17 8,366.06

Inter-segment revenue - - - - - - - -

Total revenue from operations 7,226.81 8,025.87 924.18 2730.2 78.18 67.17 8,229.17 8,366.06

Result

Segment results 695.45 638.01 6.09 (0.21) 62.72 50.28 764.26 688.08

Finance costs (771.15) (679.53)

Interest income 17.29 19.76

Other income 1.61 1.82

Income tax (4.20) (10.51)

Net profi t 7.81 (19.62)

Other information

Segment assets 10,526.61 10,311.10 0.10 - 3,554.55 3,637.93 14,081.26 13,949.03

Segment liabilities 3,907.36 4,457.98 444.27 212.25 5,979.22 5,430.58 10,330.85 10,100.81

Capital expenditure 114.58 219.52 - - 3.02 99.96 117.60 319.48

Depreciation / amortisation (net) 229.30 211.00 - - 15.46 16.88 244.76 227.88

Non-cash expenses other than depreciation/ amortisation - - - - - - - -

ANNEXURE I – NOTES TO THE ABRIDGED FINANCIAL STATEMENTS

(All amounts in INR Crores, unless otherwise stated)

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201479

Secondary segment: Geographical segments*- Although the Company’s major operating divisions are managed on a worldwide basis, they operate in two principal geographical areas

of the world, in India, its home country, and the other countries.

The following table presents revenue from operations, unbilled revenue (work-in-progress) and trade receivables regarding geographical segments as at March 31, 2014 and March 31, 2013.

Revenue from operations Unbilled revenue (work-in-progress)

Trade receivable (including retention money)

Year ended As at As at

March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013India 3,431.99 4,289.46 2,840.74 2,377.81 1,073.50 1,635.16Other countries 4,797.18 4,076.60 3,232,79 2,818.29 1,304.22 1,268.42

8,229.17 8,366.06 6,073.53 5,196.10 2,377.72 2,903.58

* All the major assets other than unbilled revenue (work-in-progress) and trade receivables are situated in India and hence, separate fi gures for assets/additions to assets have not been furnished.

7. [30] Related parties Names of related parties where control exists irrespective of whether transactions have occurred or not

Subsidiary Companies Spectra Punj Lloyd Limited Punj Lloyd Industries Limited Atna Investments Limited PLN Construction Limited Punj Lloyd International Limited Punj Lloyd Kazakhstan, LLP Punj Lloyd Pte. Limited PL Engineering Limited Punj Lloyd Infrastructure Limited Punj Lloyd Upstream Limited Punj Lloyd Aviation Limited Sembawang Infrastructure (India) Private Limited Indtech Global Systems Limited Punj Lloyd Systems Limited PLI Ventures Advisory Services Private Limited Dayim Punj Lloyd Construction Contracting Company Limited

Step Down Subsidiary Companies PT Punj Lloyd Indonesia PT Sempec Indonesia Punj Lloyd Oil & Gas (Malaysia) Sdn. Bhd. Punj Lloyd Sdn. Bhd. Punj Lloyd Engineers and Constructors Pte Limited Punj Lloyd Engineers and Constructors Zambia Limited (w.e.f. January 14, 2013) Buffalo Hills Limited Indtech Trading FZ LLC PLI Ventures Limited Punj Lloyd Infrastructure Pte Limited Punj Lloyd Kenya Limited Sembawang Group Pte Limited (upto March 31, 2014)* PL Global Developers Pte Limited (Formerly known as Punj Lloyd Singapore Pte Ltd)

ANNEXURE I – NOTES TO THE ABRIDGED FINANCIAL STATEMENTS

(All amounts in INR Crores, unless otherwise stated)

F INANCIALS80

Christos Trading Limited (upto March 31, 2014)* Christos Aviation Limited ( w.e.f. October 24, 2012) Graystone Bay Limited ( w.e.f. February 05, 2013) Punj Lloyd Thailand (Co.) Limited Punj Lloyd Aviation Pte Limited (w.e.f. January 02, 2014)* Punj Lloyd Delta Renewables Pte. Limited Punj Lloyd Delta Renewables Private Limited Punj Lloyd Delta Renewables Bangladesh Limited Punj Lloyd Engineering Pte Limited Simon Carves Engineering Limited PL Delta Technologies Limited (from September 10, 2012 to March 01, 2013) @ Punj Lloyd Solar Power Limited Khagaria Purnea Highway Project Limited Indraprastha Metropolitan Development Limited PL Surya Urja Limited (w.e.f. September 03, 2013)* Sembawang Engineers and Constructors Pte. Limited Sembawang Development Pte Limited Sembawang Libya General Contracting & Investment Company Contech Trading Pte Limited PT Contech Bulan (upto March 31, 2014) * Construction Technology (B) Sdn Bhd Sembawang Mining (Kekal) Pte Limited PT Indo Precast Utama PT Indo Unggul Wasturaya Sembawang (Tianjin) Construction Engineering Co. Limited Sembawang Infrastructure (Mauritius) Limited Sembawang UAE Pte Limited SC Architects and Engineers Pte Limited Sembawang (Malaysia) Sdn Bhd Jurubina Sembawang (M) Sdn Bhd Tueri Aquila FZE Sembawang Bahrain SPC Sembawang Equity Capital Pte. Limited Sembawang of Singapore – Global Project Underwriters Pte Limited Sembawang of Singapore – Global Project Underwriters Limited (w.e.f. August 09, 2012) Sembawang Australia Pty. Limited (upto February 20, 2014)* Sembawang Hong Kong Limited Sembawang (Tianjin) Investment Management Co. Limited PT Sembawang Indonesia Sembawang International Limited Sembawang Tianjin Pte Limited (upto March 12, 2014)* Sembawang Tianjin Heping Pte Limited (upto March 12, 2014)* Sembawang Commodities Pte Ltd. (w.e.f. December 04, 2012) Reliance Contractors Private Limited (w.e.f. August 05, 2013)** Joint Ventures Thiruvananthpuram Road Development Company Limited Kaefer Punj Lloyd Limited # Ramprastha Punj Lloyd Developers Private Limited Asia Drilling Services Limited (upto June 30, 2012) Punj Lloyd Dynamic LLC AeroEuro Engineering India Private Limited PLE TCI Engineering Limited (upto March 31, 2014)@ PLE TCI Engenharia Ltda PT Kekal Adidaya

ANNEXURE I – NOTES TO THE ABRIDGED FINANCIAL STATEMENTS

(All amounts in INR Crores, unless otherwise stated)

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201481

Sembawang Precast System LLC Sembawang Caspi Engineers and Constructors LLP Joint Venture of Whessoe Oil and Gas Limited and Punj Lloyd Limited Punj Lloyd PT Sempec Total-CDC-DNC Joint Operation Kumagai-Sembawang-Mitsui Joint Venture Kumagai-SembCorp Joint Venture Philipp Holzmann-SembCorp Joint Venture Kumagai-SembCorp Joint Venture (DTSS) Semb-Corp Daewoo Joint Venture Sime Engineering Sdn Bhd Sembawang Malaysia Sdn Bhd Joint Venture Sime Engineering Sdn Bhd SembCorp Malaysia Sdn Bhd Joint Venture Total Sempac Joint Operations (upto December 31, 2013)* Punj Lloyd Group Joint Venture Public Works Company Tripoli Punj Lloyd Joint Venture Sembawang – Leader Joint Venture(w.e.f August 03, 2012)

Associates Olive Group India Private Limited (upto August 12, 2013)* Hazaribagh Ranchi Expressway Limited (upto January 23, 2014)@ Air Works India (Engineering) Private Limited Olive Group Capital Limited (upto October 16, 2013)* Reliance Contractors Private Limited (upto August 05, 2013)** Ventura Development (Myanmar) Pte Limited (upto March 12, 2014)* Reco Sin Han Pte Limited

* These entities have been incorporated / formed/ disposed off during the year.** The Company acquired additional stake in this entity to make it its subsidiary on August 05, 2013. Before this date the said entity was

an associate.# The Company has ceased to have the control over the operations of the joint venture w.e.f. February 15, 2013.@ Investment held for sale in the near future.

Key Managerial PersonnelAtul Punj - Chairman Luv Chhabra - Director (Corporate Affairs)Pawan Kumar Gupta (upto December 31, 2013) - Whole Time DirectorP. N. Krishnan (w.e.f. November 01, 2013) - Director – FinanceJ. P. Chalasani (w.e.f. January 31, 2014) - Managing Director & Group CEO

Relatives of Key Managerial PersonnelS.N.P. Punj - Father of ChairmanArti Singh - Sister of ChairmanIndu Rani Punj - Mother of ChairmanNavina Punj - Wife of ChairmanUday Punj - Brother of ChairmanManglam Punj - Wife of Brother of ChairmanJai Punj - Son of Brother of ChairmanDev Punj - Son of Brother of ChairmanJyoti Punj - Sister of Chairman

ANNEXURE I – NOTES TO THE ABRIDGED FINANCIAL STATEMENTS

(All amounts in INR Crores, unless otherwise stated)

F INANCIALS82

Enterprises over which Key Managerial Personnel or their relatives are exercising signifi cant infl uencePt. Kanahya Lal Dayawanti Punj Charitable Society - Chairmanship of Father of ChairmanSpectra Punj Finance Private Limited - Shareholding of ChairmanCawdor Enterprises Limited - Shareholding of ChairmanUday Punj (HUF) - HUF of Brother of ChairmanK.R. Securities Private Limited - Shareholding of Brother of ChairmanAtul Punj (HUF) - HUF of ChairmanPTA Engineering and Manpower Services Private Limited - Shareholding of ChairmanPLE Hydraulics Private Limited - Shareholding of ChairmanPetro IT Limited - Shareholding of Brother of ChairmanArtcon Private Limited - Shareholding of ChairmanMangalam Equipment Private Limited - Shareholding of ChairmanIntramural Design Limited - Shareholding of Sister of Chairman

ANNEXURE I – NOTES TO THE ABRIDGED FINANCIAL STATEMENTS

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(All amounts in INR Crores, unless otherwise stated)

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201493

8. [34] Loans and advances in the nature of loans given to subsidiaries and associates in which directors are interested in terms of disclosure required as per Clause 32 of the Listing agreement

Name of the entities Outstanding amount as at Maximum amount outstanding during the year ended

March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013

Punj Lloyd Kazakhstan LLP 6.76 14.18 14.18 33.39

Punj Lloyd Pte Limited 433.58 1,538.71 1,538.71 1,694.77

Punj Lloyd Aviation Limited 15.07 15.07 15.07 15.07

Punj Lloyd Infrastructure Limited 226.87 146.95 226.87 146.95

Punj Lloyd Upstream Limited 16.81 15.01 19.51 15.01

PT Punj Lloyd Indonesia 6.76 5.54 6.80 5.54

Punj Lloyd International Limited 4.30 3.88 4.33 3.88

PLI Ventures Advisory Services Private Limited 0.99 0.99 0.99 0.99

Sembawang Infrastructure (India) Private Limited 5.22 5.22 5.22 5.22

Spectra Punj Lloyd Limited 32.91 33.08 33.08 33.08

Punj Lloyd Delta Renewables Private Limited - - - 4.00

PLN Construction Limited 17.76 28.31 28.31 28.31

All the above loans are repayable on demand.

9. [35] The Micro and Small Enterprises have been identifi ed by the Company from the available information, which has been relied upon by the auditors. According to such identifi cation, the disclosures in respect to Micro and Small Enterprise as per Micro, Small and Medium Enterprise Development Act, 2006 is as follows:

S.No. Particulars 2013-14 2012-13

i) The principal amount and the interest due thereon remaining unpaid to any supplier as at the end of each accounting year - Principal amount - Interest thereon

NilNil

NilNil

ii) The amount of interest paid by the buyer in terms of section 16, of the Micro, Small and Medium Enterprise Development Act, 2006 along with the amounts of the payment made to the supplier beyond the appointed day during each accounting year.

Nil Nil

iii) The amount of interest due and payable for the year of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specifi ed under Micro, Small and Medium Enterprise Development Act, 2006.

Nil Nil

iv) The amount of interest accrued and remaining unpaid at the end of each accounting year; and Nil Nil

v) The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise for the purpose of disallowance as a deductible expenditure under section 23 of the Micro, Small and Medium Enterprise Development Act, 2006.

Nil Nil

ANNEXURE I – NOTES TO THE ABRIDGED FINANCIAL STATEMENTS

(All amounts in INR Crores, unless otherwise stated)

F INANCIALS94

10. [36] The following note has been referred to by the Auditors in their report on the complete set of fi nancial statements:

The Company had executed certain projects for some customers in earlier years. These customers have withheld amounts aggregating to Rs. 53.91 crores (Previous year Rs. 58.02 crores) on account of deductions made/amount withheld by some customers, which are being carried as trade receivables. The Company has also fi led certain claims against these customers. The Company has gone into arbitration/legal proceedings against these customers for recovery of amounts withheld and for claims lodged by the Company. Pending outcome of arbitration/legal proceedings, amounts withheld for deductions made are being carried forward as recoverable. The Company has been legally advised that there is no justifi cation in imposition of deductions by these customers and hence the above amounts are considered good of recovery

11. [38] The Company has an investment in the equity and preference capital amounting to Rs. 1,182.81 crores (Previous year Rs. 299.71 crores) and has loans and advance outstanding to Rs. 433.58 crores (Previous year Rs. 1,538.71 crores) as at March 31, 2014 from Punj Lloyd Pte Limited, a subsidiary in Singapore. The subsidiary has accumulated losses of Rs. 681.62 crores (Previous year Rs. 413.27 crores) as at March 31, 2014. However, the subsidiary is holding certain strategic investments. Considering the intrinsic value of the investments held by the subsidiary, based on the valuation carried out by an independent valuer, and also considering the long term business plan of the subsidiary including the forecasts of profi tability of operations, the Company is of the view that there is no other than temporary diminution in the value of investment and accordingly, no provision is considered necessary in the fi nancial statements at this stage on the above account.

12. [39] The Company has unbilled revenue (work-in-progress) of Rs. 188.95 crores on certain projects on account of variation arising due to change in scope of work and delays, which the management believes is attributable to the customers. The management, based on the expert inputs, is of the view that the Company would collect the above stated amount upon completion of the processing of the claims by the clients. Accordingly, the above amounts are considered good of recovery.

13. [41] The following note has been referred to by the Auditors in their report on the complete set of fi nancial statements:

The Company has accrued claims amounting to Rs. 733.98 crores (Previous year Rs. 250.33 crores) on Heera Redevelopment Project with Oil and Natural Gas Corporation Limited, based upon management’s assessment of cost over-run arising due to design changes and consequent changes in the scope of work on the said project since it is of the view that the delay in execution of the project is attributable to the customer. Due to the said reasons certain differences and dispute arose between both the parties and several rounds of discussions were held to explore the possibility of amicable resolution of the dispute mutually. In pursuant to it, the dispute has now been referred to a new Outside Expert Committee. The management, based on the developments so far in the said matter, is confi dent of a satisfactory settlement of the dispute and recovery of the said amounts exceeding the recognized claim.

14. [42] The following note has been referred to by the Auditors in their report on the complete set of fi nancial statements:

During the year ended March 31, 2014, the Company’s branch in Thailand has received a termination notice for the Fourth Transmission Pipeline Project (the Project) with PTT Thailand (the Customer) on the grounds of delay in execution of the Project for reasons solely attributable to the Branch and for not honoring the contractual obligations of the Project. The Branch has retracted the notice by stating that the said grounds of termination are without merit and in turn there is a material breach on the part of the Customer in honoring the obligations. The Branch, in the best interest of the Project, had been executing the works but in view of the continuing breach of the contract terms by the Customer and no efforts to ratify the same, the branch has terminated the project and accounted a claim amounting to Rs. 389.86 crores for additional costs incurred due to the above stated reasons through the Civil Court of Thailand on February 25, 2014. The management, based on the expert inputs, is confi dent of recovery of the amounts exceeding the recognized claim.

15. [43] The Company has an investment in the equity capital amounting to Rs. 17.09 crores (Previous year Rs. 17.09 crores) and has loans and advances outstanding to Rs. 6.76 crores (Previous year Rs. 5.54 crores) from PT Punj Lloyd Indonesia, a step-down subsidiary in Indonesia. The step-down subsidiary has accumulated losses of Rs. 440.40 crores (Previous year Rs. 235.96 crores) as at March 31, 2014. However, considering the long term business plan of the step down subsidiary, including the forecasts of profi tability of operations, the Company is of the view that there is no other than temporary diminution in the value of investment and accordingly, no provision is considered necessary in the fi nancial statements at this stage on the above account.

ANNEXURE I – NOTES TO THE ABRIDGED FINANCIAL STATEMENTS

(All amounts in INR Crores, unless otherwise stated)

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201495

ANNEXURE I – NOTES TO THE ABRIDGED FINANCIAL STATEMENTS

16. [45] The Company has defaulted in repayment of principal and interest amounting to Rs. 6.57 crores and Rs. 0.14 crores respectively, as on March 31, 2014. The said amounts have been paid subsequent to the balance sheet date.

17. Amounts disclosed under abridged fi nancial statements are same as that shown in the corresponding aggregated heads in the fi nancial statements prepared in accordance with Revised Schedule VI or as near thereto as possible. Amounts in the abridged fi nancial statements are presented in INR crores, unless otherwise stated. Certain amounts that are required to be disclosed and do not appear due to rounding off are expressed as 0.00. One crore equals 10 million.

18. Complete Balance Sheet, Statement of Profi t and Loss, other statements and notes thereto prepared as per the requirements of Schedule VI to the Companies Act, 1956 are available at the Company’s website at link www.punjlloyd.com.

As per our report of even date

For Walker Chandiok & Co LLP For and on behalf of the Board of Directors of Punj Lloyd Limited(Formerly Walker, Chandiok & Co) Chartered Accountants

per David Jones Partner

Place GurgaonDate May 20, 2014

Atul Punj J.P. Chalasani Chairman Managing Director & Group CEODIN: 00005612 DIN: 00308931

P.N. Krishnan Dinesh Thairani Director - Finance Group President - Legal & Company SecretaryDIN: 00003925

FINANCIALS96

To the Members of Punj Lloyd Limited

The accompanying abridged consolidated fi nancial statements, which comprise of the abridged consolidated Balance Sheet as at March 31, 2014, the abridged consolidated Statement of Profi t and Loss and the abridged consolidated Cash Flow Statement for the year then ended, and related notes, are derived from the audited consolidated fi nancial statements of Punj Lloyd Limited (‘the Company’), its subsidiaries, associates, joint ventures (hereinafter collectively referred to as ‘the Group’) for the year ended March 31, 2014. Our report on those audited consolidated fi nancial statements dated May 20, 2014 contained an Emphasis of Matter, reproduced below in this report.

The abridged consolidated fi nancial statements do not contain all the disclosures required by the accounting principles generally accepted in India, including the Accounting Standards, applied in the preparation of the audited consolidated fi nancial statements of the Group. Reading the abridged consolidated fi nancial statements, therefore, is not a substitute for reading the audited consolidated fi nancial statements of the Group.

Management’s Responsibility for the Abridged Consolidated Financial StatementsManagement is responsible for the preparation of the abridged consolidated fi nancial statements in accordance with Rule 7A of Companies (Central Government’s) General Rules and Forms (Amendment) Rules, 2012 notifi ed pursuant to section 219(1)(b)(iv) of the Companies Act, 1956 (“the Act”), which are derived from the audited consolidated fi nancial statements for the year ended March 31, 2014 prepared in accordance with the Accounting Standards notifi ed underthe Companies Act, 1956 (“the Act”) and accounting principles generally accepted in India.

Auditors’ ResponsibilityOur responsibility is to express an opinion on the abridged consolidated fi nancial statements based on our procedures, which were conducted in accordance with Standard on Auditing (SA) 810, “Engagements to Report on Summary Financial Statements” issued by the Institute of Chartered Accountants of India.

OpinionIn our opinion, the abridged consolidated fi nancial statements derived from the audited consolidated fi nancial statements of the Group as at and for the year ended March 31, 2014 are a fair summary of those consolidated fi nancial statements, in accordance with the Rule 7A of the Companies (Central Government’s) General Rules and Forms (Amendment) Rules, 2012 notifi ed pursuant to section 219(1)(b)(iv) of the Act.

Emphasis of MatterWithout qualifying our opinion, we draw attention to:

a) note 9 to the abridged consolidated fi nancial statements, regarding recoverability of claims aggregating to Rs. 733.98 crores which are subject matter of conciliation. Pending ultimate outcome of the matter which is presently unascertainable, no adjustments have been made in the accompanying abridged consolidated fi nancial statements.

b) As reported by the Independent Auditors of the fi nancial statements of the Company’s Branch in Thailand, we draw attention to note 10 to the abridged consolidated fi nancial statements, regarding recoverability of claims aggregating to Rs. 389.86 crores. Pending ultimate outcome of the matter which is presently unascertainable, no adjustments have been made in the accompanying abridged consolidated fi nancial statements.

c) note 8 to the abridged consolidated fi nancial statements in respect of deductions made / amount withheld by some customers aggregating to Rs. 53.91 crores which are being carried as trade receivables. These amounts are outstanding due to disputes with the customers and presently the ultimate outcome of these disputes is unascertainable, however since the Company is of the view that these amounts are recoverable, no provision is required against the same.

Other Matter We did not audit the fi nancial statements of certain branches, subsidiaries, associates and joint ventures (including un-incorporated joint venture) included in the abridgedconsolidated fi nancial statements, whose fi nancial statements refl ect total assets (net of eliminations) of Rs. 9,063.39 crores as at March 31, 2014; total revenues (net of eliminations) of Rs. 7,303.44 crores and net cash fl ows aggregating to Rs. 221.75 crores for the year then ended. These fi nancial statements have been audited by other auditors whose audit reports have been furnished to us, and our opinion on the abridged consolidated fi nancial statements of the Group for the year then ended to the extent they have been derived from such fi nancial statements not audited by us as stated in this paragraph is based solely on the audit reports of the other auditors. Our opinion is not qualifi ed in respect of this matter.

For Walker Chandiok & Co LLP(Formerly Walker, Chandiok & Co)Chartered AccountantsFirm Registration No. 001076N

per David JonesPartnerMembership No. 098113

Place: GurgaonDate: May 20, 2014

REPORT OF THE INDEPENDENT AUDITORS ON THE CONSOLIDATED FINANCIAL STATEMENTS

ABRIDGED CONSOLIDATED 2013-14

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201497

To the Board of Directors of Punj Lloyd Limited

1. We have audited the accompanying consolidated fi nancial statements of Punj Lloyd Limited, (“the Company”) and its subsidiaries, associates and joint ventures (hereinafter collectively referred to as the “Group”), which comprise the consolidated Balance Sheet as at March 31, 2014, the consolidated Statement of Profi t and Loss and consolidated Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

2. Management is responsible for the preparation of these consolidated fi nancial statements that give a true and fair view of the consolidated fi nancial position, consolidated fi nancial performance and consolidated cash fl ows of the Group in accordance with accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the consolidated fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility3. Our responsibility is to express an opinion on these consolidated

fi nancial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated fi nancial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated fi nancial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and presentation of the consolidated fi nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the consolidated fi nancial statements.

5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion6. In our opinion and to the best of our information and according

to the explanations given to us and based on the consideration of the reports of the other auditors on the fi nancial statements of the subsidiaries, associates and joint ventures as noted below, the consolidated fi nancial statements give a true and fair view in conformity with the accounting principles generally accepted in India:

i) in the case of the consolidated Balance Sheet, of the state of affairs of the Group as at March 31, 2014;

ii) in the case of the consolidated Statement of Profi t and Loss, of the loss for the year ended on that date; and

iii) in the case of the consolidated Cash Flow Statement, of the cash fl ows for the year ended on that date.

Emphasis of Matter7. Without qualifying our opinion, we draw attention to:

a. note 35 to the consolidated fi nancial statements, regarding recoverability of claims aggregating to Rs. 733.98 crores which are subject matter of conciliation. Pending ultimate outcome of the matter which is presently unascertainable, no adjustments have been made in the accompanying consolidated fi nancial statements.

b. As reported by the Independent Auditors of the fi nancial statements of the Company’s branch in Thailand, we draw attention to note 36 to the consolidated fi nancial statements, regarding recoverability of claims aggregating to Rs. 389.86 crores. Pending ultimate outcome of the matter which is presently unascertainable, no adjustments have been made in the accompanying fi nancial statements.

c. note 33 to the consolidated fi nancial statements in respect of deductions made/ amount withheld by some customers aggregating to Rs. 53.91 crores which are being carried as trade receivables. These amounts are outstanding due to disputes with the customers and presently the ultimate outcome of these disputes is unascertainable, however since the Company is of the view that these amounts are recoverable, no provision is required against the same.

Other Matter8. We did not audit the fi nancial statements of certain branches,

subsidiaries, associates and joint ventures (including un-incorporated joint venture) included in the consolidated fi nancial statements, whose fi nancial statements refl ect total assets (net of eliminations) of Rs. 9,063.39 crores as at March 31, 2014; total revenues (net of eliminations) of Rs. 7,303.44 crores and net cash fl ows aggregating to Rs. 221.75 crores for the year then ended. These fi nancial statements have been audited by other auditors whose audit reports have been furnished to us by the management, and our audit opinion on the consolidated fi nancial statements of the Group for the year then ended to the extent they relate to the fi nancial statements not audited by us as stated in this paragraph is based solely on the audit reports of the other auditors. Our opinion is not qualifi ed in respect of this matter.

For Walker Chandiok & Co LLP(Formerly Walker, Chandiok & Co)Chartered AccountantsFirm Registration No. 001076N

per David JonesPartnerMembership No. 098113

Place: GurgaonDate: May 20, 2014

REPORT OF THE INDEPENDENT AUDITORS ON THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in INR Crores, unless otherwise stated)

F INANCIALS98

As at March 31, 2014 As at March 31, 2013 Equity and Liabilities

Shareholders' funds (a) Paid-up share capital Equity 66.42 66.42 (b) Reserves and surplus Capital reserves (including revaluation reserves); 30.51 30.03 Revenue reserves; 2,481.88 2,536.53 (Defi cit) / Surplus (346.55) 202.30

Preference shares issued by subsidiary company 20.01 20.01

Minority interest (40.84) 52.94

Non-current liabilities (a) Long-term borrowings 2,341.42 1,893.68 (b) Deferred tax liabilities (net) 155.35 169.17 (c) Other liabilities 28.27 - (d) Provisions 7.64 2.86Current liabilities (a) Short-term borrowings 3,906.07 3,661.45 (b) Trade payables 3,980.18 3,544.94 (c) Other liabilities 3,084.11 3,983.35 (d) Provisions 137.29 181.64

Total 15,851.76 16,345.32 Assets

Non-current assets (a) Fixed assets Tangible assets (original cost less depreciation) 2,918.80 2,622.12 Intangible assets (original cost less amortisation) 399.92 375.12 Capital work-in-progress 159.18 414.61 (b) Non-current investments Unquoted 216.88 321.84 Quoted (Market value: Rs. 40.63 crores (Previous year Rs. 43.72 crores)) 26.99 42.30 (c) Deferred tax assets (net) 11.17 18.00 (d) Loans and advances 700.41 894.30 (e) Other assets 147.01 102.66Current assets (a) Inventories 180.71 232.43 (b) Unbilled revenue (work-in-progress) 7,288.43 6,436.64 (c) Trade receivables 2,402.51 3,232.64 (d) Cash and bank balances (refer note 2) 613.27 833.44 (e) Loans and advances 661.10 791.92 (f ) Other assets 125.38 27.30

Total 15,851.76 16,345.32

ABRIDGED CONSOLIDATED BALANCE SHEET as at March 31, 2014

(All amounts in INR Crores, unless otherwise stated)

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-201499

Annexure I forms an integral part of the abridged consolidated fi nancial statements. This is the abridged consolidated balance sheet referred to in our report of even date.

For Walker Chandiok & Co LLP For and on behalf of the Board of Directors of Punj Lloyd Limited(Formerly Walker, Chandiok & Co) Chartered Accountants

per David Jones Partner

Place GurgaonDate May 20, 2014

ABRIDGED CONSOLIDATED BALANCE SHEET as at March 31, 2014

Atul Punj J.P. Chalasani Chairman Managing Director & Group CEODIN: 00005612 DIN: 00308931

P.N. Krishnan Dinesh Thairani Director - Finance Group President - Legal & Company SecretaryDIN: 00003925

(All amounts in INR Crores, unless otherwise stated)

F INANCIALS100

Year ended March 31, 2014 Year ended March 31, 2013

Income Revenue from operations 9,928.46 10,982.30 Sale of traded goods 926.39 273.31 Other operational revenue 268.47 309.23 Other income 51.01 25.30 Total income 11,174.33 11,590.14 Expenditure Project material consumed and cost of goods sold 3,899.15 3,518.72 Contractor charges 3,165.18 2,931.59 Employee benefi ts expense 1,538.02 1,683.64 Other expenses 1,933.68 2,280.69 Total expenses 10,536.03 10,414.64 Earnings before interest, tax, depreciation and amortisation (EBITDA) 638.30 1,175.50 Depreciation and amortisation expenses (net) 392.48 353.51 Finance costs 881.95 780.77 (Loss) / Profi t before tax (636.13) 41.22

Tax expense: Current tax 7.71 75.55 Minimum alternate tax credit entitlement (0.14) (0.94)Deferred tax 0.17 (4.31)

Total tax expense 7.74 70.30

Loss after tax for the year (643.87) (29.08) Share of profi ts/(losses) in associates (net) 7.25 4.07 Share of (profi ts)/losses transferred to minority 88.39 17.80 Loss for the year after taxes, minority interest and share of profi t/(losses) of associates (548.23) (7.21)

Earnings per share [nominal value per share Rs. 2 each (Previous year Rs. 2)]:

Basic and Diluted (in Rs.) (16.51) (0.22)

Annexure I forms an integral part of the abridged consolidated fi nancial statements.This is the abridged consolidated statement of profi t and loss referred to in our report of even date.

For Walker Chandiok & Co LLP For and on behalf of the Board of Directors of Punj Lloyd Limited(Formerly Walker, Chandiok & Co) Chartered Accountants

per David Jones Partner

Place GurgaonDate May 20, 2014

Atul Punj J.P. Chalasani Chairman Managing Director & Group CEODIN: 00005612 DIN: 00308931

P.N. Krishnan Dinesh Thairani Director - Finance Group President - Legal & Company SecretaryDIN: 00003925

ABRIDGED CONSOLIDATED STATEMENT OF PROFIT AND LOSS for the year ended on March 31, 2014

(All amounts in INR Crores, unless otherwise stated)

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014101

Year ended March 31, 2014 Year ended March 31, 2013 A. Cash fl ow from operating activities 454.05 226.96 B. Cash fl ow used in investing activities (85.21) (660.00)C. Cash fl ow (used in) / from fi nancing activities (602.68) 446.27

Net (decrease) / increase in cash and cash equivalent (A+B+C) (233.84) 13.23 Exchange differences (144.32) (154.14)Cash outfl ow due to disposal of subsidiary / joint venture - (0.59)Cash and cash equivalent at beginning of the year 755.30 896.80 Cash and cash equivalent at end of the year (also refer note 2) 377.14 755.30

Annexure I forms an integral part of the abridged consolidated fi nancial statements.

This is the abridged consolidated cash fl ow statement referred to in our report of even date.

For Walker Chandiok & Co LLP For and on behalf of the Board of Directors of Punj Lloyd Limited(Formerly Walker, Chandiok & Co) Chartered Accountants

per David Jones Partner

Place GurgaonDate May 20, 2014

Atul Punj J.P. Chalasani Chairman Managing Director & Group CEODIN: 00005612 DIN: 00308931

P.N. Krishnan Dinesh Thairani Director - Finance Group President - Legal & Company SecretaryDIN: 00003925

ABRIDGED CONSOLIDATED CASH FLOW STATEMENT for the year ended on March 31, 2014

(All amounts in INR Crores, unless otherwise stated)

F INANCIALS102

(The note numbers appearing in the brackets “[ ]” are as they appear in the complete set of consolidated fi nancial statements)

1. Basis of preparation These abridged consolidated fi nancial statements have been prepared in accordance with the requirements of Rule 7A of the Companies

(Central Government’s) General Rules and Forms, 1956 and clause 32 of the Listing Agreement. These abridged consolidated fi nancial statements have been prepared on the basis of the complete set of consolidated fi nancial statements for the year ended March 31, 2014.

2. [17] Cash and bank balances

As at March 31, 2014 As at March 31, 2013

Cash and cash equivalents

Balances with banks: – On current accounts (including cheques in hand of Nil (Previous year Rs. 2.47 crores)) # 364.15 605.24 – on cash credit accounts 0.13 14.28 – On EEFC account 0.01 0.48 Deposit with original maturity of less than three months 3.42 126.30 Cash on hand 9.43 9.00

377.14 755.30 Other bank balances

– Deposits with original maturity for more than 12 months 1.62 1.52 – Deposits with original maturity for more than 3 months but less than 12 months 2.24 59.53 – Margin money deposit 232.27 17.09

236.13 78.14 Total cash and bank balances 613.27 833.44

# Includes unclaimed dividend of Rs. 0.26 crores (Previous year Rs. 0.27 crores).

3. [30] Capital and other commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advance) is Rs 32.72 crores (Previous year Rs. 349.29 crores).

(b) Estimated future investments in joint venture and other companies in terms of respective shareholders agreements is Rs. Nil (Previous year Rs. 24.99 crores).

(c) For commitments relating to lease arrangements, please refer note 5.

4. [31] Contingent liabilities

As at March 31, 2014 As at March 31, 2013

a) Liquidated damages deducted by customers not accepted by the Company and pending fi nal settlement. #

170.05

171.75

b) Demand by custom authorities against import of aircraft 17.89 17.89

c) Sales tax demands: *on disallowance of deduction on labour and services of the works contracts pending with sales tax authorities and High Court

22.35

22.82

for non submission of statutory forms - 6.60 for purchases against sales tax forms not accepted by department 8.61 8.61 against the central sales tax demand on sales in transit 0.07 0.07 for non-admissible of deduction of supply turnover 2.77 2.77 in one of an overseas subsidiary 25.82 29.86

d) Entry tax demands against entry of goods into the local area not accepted by department. * 4.08 4.49

ANNEXURE I – NOTES TO THE ABRIDGED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in INR Crores, unless otherwise stated)

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014103

# excludes possible liquidated damages which can be levied by customers for delay in execution of projects. The management based on consultation with various experts believes that there exist strong reasons why no liquidated damages shall be levied by these customers. Although, there can be no assurances, the Company believe, based on information currently available, that the ultimate resolution of these proceedings is not likely to have an adverse effect on the results of operations, fi nancial position or liquidity of the Company.

* Based on favorable decisions in similar cases/legal opinions taken by the group entities/consultations with solicitors, the management believes that the Company has good chances of success in above mentioned cases and hence, no provision there against is considered necessary.

e) On March 17, 2010, the Company was subjected to a search and seizure operation under Section 132 and survey under Section 133A of the Income tax Act, 1961. During the search and seizure operation, statements of Company’s offi cials were recorded in which they were made to offer some unaccounted income of the Company for the fi nancial year 2009-10. The Company believes that the above statements were made under undue mental pressure and physical exhaustion and therefore Company has retracted the above statements subsequently. The Company has fi led fresh returns of income for Assessment years 2004-05 to 2009-10 in pursuance of the notices dated August 25, 2010 from the Income Tax Department (“the Department”). The Department has completed the assessments for the assessment years 2004-05 to 2010-11 and has raised demands aggregating to Rs. 229.13 crores, by making some frivolous additions to the total income of the Company, which has been adjusted against the income tax refunds of the said/subsequent years. The Company has fi led the appeals against these additions on January 27, 2012 and June 12, 2013 and based on the expert opinion, the Company is hopeful that it will get relief in appeal.

f) On January 20, 2014, the Company was subjected to an investigation by Directorate General of Central Excise Intelligence (DGCEI) on various service tax compliance matters. The Company is furnishing the requisite information and the same is currently being scrutinized/ inquired by DGCEI as per the provisions of the Finance Act, 1994 (as amended). The amount of demand, if any, can be ascertained only upon completion of the said inquiry.

g) The Group, directly or indirectly, is severally or jointly involved in certain legal cases with its customers / vendors. The management believes that due to the nature of these disputes and in view of signifi cant uncertainty over the ultimate outcome of the said cases, the amount of exposure, if any, is not currently determinable.

5. [26] Leases

(a) Finance lease The Group has fi nance leases and hire purchase contracts for certain project equipments, vehicles and building, the cost of which is

included in the gross block of plant and equipment, vehicles and buildings under tangible assets. The lease term is for one to ninety nine years. There is no escalation clause in the lease agreements. There are no restrictions imposed by lease arrangements.

2013-14 2012-13

Gross block at the end of fi nancial year 304.35 203.96 Written down value at the end of fi nancial year 242.08 176.40 Details of payments made during the year: - Principal 29.25 3.88 - Interest 4.17 0.52

The break-up of minimum lease payments outstanding as at reporting date is as under:

As at March 31, 2014 As at March 31, 2013

Principal Interest Total Principal Interest Total

Payable within one year 42.99 11.53 54.52 15.61 2.39 18.00 Payable after one year but before end of fi fth year 53.76 7.35 61.11 11.94 0.66 12.60

(b) Operating lease The Group has entered into commercial leases on certain project equipment and offi ce premises. There are no contingent rents in the

lease agreements. The lease term is for 1-3 years and is renewable at the mutual agreement of both the parties. There is no escalation clause in the lease agreements. There are no restrictions imposed by lease arrangements.

ANNEXURE I – NOTES TO THE ABRIDGED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in INR Crores, unless otherwise stated)

F INANCIALS104

The break-up of future minimum lease payments outstanding as at reporting date is as under:

As at March 31, 2014 As at March 31, 2013

Not later than one year 22.01 41.61 Later than one year and not later than fi ve years 19.10 14.78 Later than fi ve years 17.29 13.80

6. [28] Segment information

Primary segment: Business segments - The Company has identifi ed the business segment as its primary reportable segment. The Company’s operating businesses are

organized and managed separately according to the nature of products and services provided. The Company has identifi ed Engineering, procurement and construction services and Trading of goods as its two reportable segments. A description of the types of products and services provided by each reportable segment is as follows:

Engineering, procurement and construction segment include providing of engineering, procurement and construction services in oil, gas and infrastructure sectors.

Trading of goods includes purchase and sale of steel, mainly outside India.

The following table presents segment revenue, results, assets and liabilities in accordance with AS 17 – Segment Reporting as on March 31, 2014 and March 31, 2013:

Engineering, procurement and construction services Traded goods Corporate unallocable Total

2013-14 2012-13 2013-14 2012-13 2013-14 2012-13 2013-14 2012-13

Revenue

External revenue 9,913.68 10,980.41 926.39 273.31 14.78 1.89 10,854.85 11,255.61

Inter-segment revenue - - - - - - - -

Total revenue from operations 9,913.68 10,980.41 926.39 273.31 14.78 1.89 10,854.85 11,255.61

Result

Segment results 242.02 823.28 8.30 0.08 (34.94) (47.57) 215.38 775.79

Finance costs (881.95) (780.77)

Interest income 13.27 13.42

Other income 17.17 32.78

Income tax (7.74) (70.30)

Net profi t (643.87) (29.08)

Share of profi ts/(losses) in associates (net) 7.25 4.07

Share of (profi ts)/losses transferred to Minority 88.39 17.80

Loss for the year after taxes, minority interest and share of profi t/(losses) of associates (548.23) (7.21)

Other information

Segment assets 13,339.40 13,469.29 0.40 - 2,511.96 2,875.78 15,851.76 16,345.07

Segment liabilities 5,911.26 6,098.09 444.27 212.25 7,284.80 7,126.50 13,640.33 13,436.84

Capital expenditure 660.85 321.62 - - 3.02 99.96 663.87 421.58

Depreciation / amortisation (net) 342.77 304.05 - - 49.71 49.46 392.48 353.51

Non-cash expenses other than depreciation/ amortisation - - - - - - - -

ANNEXURE I – NOTES TO THE ABRIDGED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in INR Crores, unless otherwise stated)

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014105

Secondary segment: Geographical segments* - Although the Company’s major operating divisions are managed on a worldwide basis, they operate in two principal geographical areas

of the world, in India, its home country, and the other countries. The following table presents revenue from operations, unbilled revenue (work-in-progress) and trade receivables regarding geographical

segments as at March 31, 2014 and March 31, 2013.

Revenue from operations Unbilled revenue (Work-in-progress)

Trade receivable (including retention money)

Year ended As at As atMarch 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013

India 3,215.30 3,981.30 2,900.63 2,457.31 1,089.61 1,651.64 Other countries 7,639.56 7,274.30 4,387.80 3,979.33 1,312.90 1,581.00 10,854.86 11,255.60 7,288.43 6,436.64 2,402.51 3,232.64

* All the major assets other than unbilled revenue (work-in-progress) and trade receivables are situated in India and hence, separate fi gures for assets/additions to assets have not been furnished.

7. [29] Related parties Names of related parties where control exists irrespective of whether transactions have occurred or not

Joint ventures Thiruvananthapuram Road Development Company Limited Asia Drilling Services Limited (upto June 30, 2012) Kaefer Punj Lloyd Limited (upto February 15, 2013) Joint Venture of Whessoe Oil and Gas Limited and Punj Lloyd Limited Ramprastha Punj Lloyd Developers Private Limited Total-CDC-DNC Joint Operation Kumagai-Sembawang-Mitsui Joint Venture Kumagai-SembCorp Joint Venture (DTSS) Kumagai-SembCorp Joint Venture Philipp Holzmann-SembCorp Joint Venture Semb-Corp Daewoo Joint Venture Sime Engineering Sdn Bhd Sembawang Malaysia Sdn Bhd Joint Venture Sime Engineering Sdn Bhd SembCorp Malaysia Sdn Bhd Joint Venture Punj Lloyd PT Sempec Indonesia PT Kekal Adidaya Punj Lloyd Group Joint Venture Public Works Company Tripoli Punj Lloyd Joint Venture Sembawang Precast System LLC Total Sempec Joint Operation (upto December 31, 2013) AeroEuro Engineering India Private Limited Punj Lloyd Dynamic LLC PLE TCI Engineering Limited (upto March 31, 2014) PLE TCI Engenharia Ltda Sembawang Caspi Engineering and Construction LLP Sembawang – Leader Joint Venture (w.e.f. August 03, 2012)

ANNEXURE I – NOTES TO THE ABRIDGED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in INR Crores, unless otherwise stated)

F INANCIALS106

Associates Reliance Contractors Private Limited (upto August 05, 2013) Ventura Development (Myanmar) Pte Limited (upto March 12, 2014) Reco Sin Han Pte Limited Air Works India (Engineering) Private Limited Olive Group Capital Limited (upto October 16, 2013) Olive Group India Private Limited (upto August 12, 2013) Hazaribagh Ranchi Expressway Limited (upto January 23, 2014)

Key managerial personnelAtul Punj - Chairman Luv Chhabra - Director (Corporate Affairs)J.P. Chalasani (w.e.f. January 31, 2014) - Managing Director & Group CEOP.N. Krishnan (w.e.f. November 01, 2013) - Director – FinancePawan Kumar Gupta (upto December 31, 2013) - Whole Time Director

Relatives of Key Managerial PersonnelS.N.P. Punj - Father of ChairmanArti Singh - Sister of ChairmanIndu Rani Punj - Mother of ChairmanNavina Punj - Wife of ChairmanUday Punj - Brother of ChairmanManglam Punj - Wife of Brother of ChairmanJai Punj - Son of Brother of ChairmanDev Punj - Son of Brother of ChairmanJyoti Punj - Sister of Chairman

Enterprises over which Key Managerial Personnel or their relatives are exercising signifi cant infl uencePt. Kanahya Lal Dayawanti Punj Charitable Society - Chairmanship of Father of ChairmanSpectra Punj Finance Private Limited - Shareholding of ChairmanCawdor Enterprises Limited - Shareholding of ChairmanUday Punj (HUF) - HUF of Brother of ChairmanK.R. Securities Private Limited - Shareholding of Brother of ChairmanAtul Punj (HUF) - HUF of ChairmanPTA Engineering and Manpower Services Private Limited - Shareholding of ChairmanPLE Hydraulics Private Limited - Shareholding of ChairmanPetro IT Limited - Shareholding of Brother of ChairmanArtcon Private Limited - Shareholding of ChairmanMangalam Equipment Private Limited - Shareholding of ChairmanIntramural Design Limited - Shareholding of Sister of Chairman

ANNEXURE I – NOTES TO THE ABRIDGED CONSOLIDATED FINANCIAL STATEMENTS

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(All amounts in INR Crores, unless otherwise stated)

Punj Lloyd | Annual Report 2013-2014 2013-2014 2013-2014109

8. [33] The following note has been referred to by the Auditors in their report on the complete set of consolidated fi nancial statements:

The Company had executed certain projects for some customers in earlier years. These customers have withheld amounts aggregating to Rs. 53.91 crores (Previous year Rs. 58.02 crores) on account of deductions made/amount withheld by some customers, which are being carried as trade receivables. The Company has also fi led certain claims against these customers. The Company has gone into arbitration/legal proceedings against these customers for recovery of amounts withheld and for claims lodged by the Company. Pending outcome of arbitration/legal proceedings, amounts withheld for deductions made are being carried forward as recoverable. The Company has been legally advised that there is no justifi cation in imposition of deductions by these customers and hence the above amounts are considered good of recovery.

9. [35] The following note has been referred to by the Auditors in their report on the complete set of consolidated fi nancial statements:

The Company has accrued claims amounting to Rs. 733.98 crores (Previous year Rs. 250.33 crores) on Heera Redevelopment Project with Oil and Natural Gas Corporation Limited, based upon management’s assessment of cost over-run arising due to design changes and consequent changes in the scope of work on the said project since it is of the view that the delay in execution of the project is attributable to the customer. Due to the said reasons certain differences and dispute arose between both the parties and several rounds of discussions were held to explore the possibility of amicable resolution of the dispute mutually. In pursuant to it, the dispute has now been referred to a new Outside Expert Committee. The management, based on the developments so far in the said matter, is confi dent of a satisfactory settlement of the dispute and recovery of the said amounts exceeding the recognized claim.

10. [36] The following note has been referred to by the Auditors in their report on the complete set of consolidated fi nancial statements:

During the year ended March 31, 2014, the Company’s branch in Thailand has received a termination notice for the Fourth Transmission Pipeline Project (the Project) with PTT Thailand (the Customer) on the grounds of delay in execution of the Project for reasons solely attributable to the Branch and for not honoring the contractual obligations of the Project. The Branch has retracted the notice by stating that the said grounds of termination are without merit and in turn there is a material breach on the part of the Customer in honoring the obligations. The Branch, in the best interest of the Project, had been executing the works but in view of the continuing breach of the contract terms by the Customer and no efforts to ratify the same, the branch has terminated the project and accounted a claim amounting to Rs. 389.86 crores for additional costs incurred due to the above stated reasons through the Civil Court of Thailand on February 25, 2014. The management, based on the expert inputs, is confi dent of recovery of the amounts exceeding the recognized claim.

11. Amounts disclosed under abridged consolidated fi nancial statements are same as that shown in the corresponding aggregated heads in the consolidated fi nancial statements prepared in accordance with Revised Schedule VI or as near thereto as possible. Amounts in the consolidated abridged fi nancial statements are presented in INR crores, unless otherwise stated. Certain amounts that are required to be disclosed and do not appear due to rounding off are expressed as 0.00. One crore equals 10 million.

12. Complete Consolidated Balance Sheet, Consolidated Statement of Profi t and Loss, other statements and notes thereto prepared as per the requirements of Schedule VI to the Companies Act, 1956 are available at the Company’s website at link www.punjlloyd.com.

As per our report of even date

For Walker Chandiok & Co LLP For and on behalf of the Board of Directors of Punj Lloyd Limited(Formerly Walker, Chandiok & Co) Chartered Accountants

per David Jones Partner

Place GurgaonDate May 20, 2014

Atul Punj J.P. Chalasani Chairman Managing Director & Group CEODIN: 00005612 DIN: 00308931

P.N. Krishnan Dinesh Thairani Director - Finance Group President - Legal & Company SecretaryDIN: 00003925

ANNEXURE I – NOTES TO THE ABRIDGED CONSOLIDATED FINANCIAL STATEMENTS

110

NOTES

Form No. MGT-11Proxy form

[Pursuant to section 105(6) of the Companies Act, 2013 and rule 19(3) of the Companies (Management and Administration) Rules, 2014]

CIN: L74899DL1988PLC033314Name of the company: PUNJ LLOYD LIMITED

Registered office: Punj Lloyd House, 17-18, Nehru Place, New Delhi - 110019

Name of the member (s) :

Registered address :

E-mail Id :

Folio No/ Client Id :

DP ID :

I/We, being the member (s) of ...............Equity Shares of the above named company, hereby appoint:

1. Name: ………………..…… 2. Name: ……………..……… 3. Name: …………....…...……

Address: Address: Address:

E-mail Id: E-mail Id: E-mail Id:

Signature:………........……., or failing him Signature:………........……., or failing him Signature:………..............…….

as my / our proxy to attend and vote (on a poll) for me/us and on my / our behalf at the 26th Annual General Meeting of the Company, to be held on Monday, the 4th day

August of 2014 At 10.30 A.M. at Air Force Auditorium, Subroto Park, New Delhi 110010 and at any adjournment thereof in respect of such resolutions as are indicated below:

Reso. No. Description For* Against*

1. To receive, consider and adopt the Financial Statements of the Company for the year ended March 31, 2014 including audited Balance Sheet as at

March 31, 2014 and the Statement of Profit and Loss for the year ended on that date and the Reports of the Board of Directors and Auditors thereon.

2. To appoint a director in place of Mr. Luv Chhabra (holding DIN 00005413), who retires by rotation and being eligible offers himself for re-appointment.

3. To appoint M/s. Walker Chandiok & Co LLP, Chartered Accountants (Registration No. 001076N), as Statutory Auditors of the Company

from the conclusion of the ensuing Annual General Meeting until the conclusion of the Fourth consecutive Annual General Meeting of the

Company (subject to ratification of their appointment at each Annual General Meeting) and fix their remuneration.

4. Appointment of Dr. Naresh Kumar Trehan as an Independent Director of the Company for a term up to five years.

5. Appointment of Mr. Phiroz Adi Vandrevala as an Independent Director of the Company for a term up to five years.

6. Appointment of Ms . Ekaterina Alexandra Sharashidze as an Independent Director of the Company for a term up to five years.

7. Appointment of Mr. Maniedath Madhavan Nambiar as an Independent Director of the Company for a term up to five years.

8. Appointment of Mr. Puthucode Narayanswami Krishnan as a Director of the Company liable to retire by rotation.

9. Appointment and payment of remuneration to Mr. Puthucode Narayanswami Krishnan as Director Finance and CFO of the Company.

10. Appointment of Mr. Jayarama Prasad Chalasani as a Director of the Company liable to retire by rotation.

11. Appointment and payment of remuneration to Mr. Jayarama Prasad Chalasani as Managing Director and Group CEO of the Company.

12. Payment of remuneration to Mr. Luv Chhabra as Whole time Director of the Company.

13. To authorise the Board of Directors of the Company to appoint Branch Auditors.

14. To authorise the Board of Directors of the Company to borrow sums upto Rs. 10,000 Crores.

15. To authorise the Board of Directors of the Company to mortgage / hypothecate / charge the assets of the Company including whole or

substantially whole of the Undertaking(s) of the Company.

Signed this…..................................................… day of…….....................… 2014

1. Signature of Proxy holder(s) .............................. Signature of shareholder ...................................

2. Signature of Proxy holder(s) .............................. 3. Signature of Proxy holder(s) .............................. Notes : * 1. Please put a ‘X’ in the Box in the appropriate column against the respective resolutions. If you leave the ‘For’ or ‘Against’ column blank against any or all the

resolutions, your Proxy will be entitled to vote in the manner as he / she thinks appropriate. 2. This form of proxy in order to be effective should be duly completed and deposited at the Registered Office of the Company, not less than 48 hours before the

commenncement of the Annual General Meeting. 3. Also please refer to Note No. 1 of the Notice convening the Annual General Meeting.

AffixRevenueStamp